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“How To” Tutorial for the Powerpoint Instructional Slides

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1 “How To” Tutorial for the Powerpoint Instructional Slides
ANTITRUST LAW INTERPRETATION AND IMPLEMENTATION Goetz, McChesney & Lambert “How To” Tutorial for the Powerpoint Instructional Slides CLICK ON THIS NAVIGATION BUTTON IF THIS IS YOUR FIRST USE OF THE TUTORIAL. Otherwise, use the Menu button at the left. Menu First Use Start Here

2 “How To” Main Menu (Click on the Bulleted Hyperlinks)
Click Here to Read This First The Basics of “Navigation Buttons” Using Hyperlinks for Browser-like Navigations Animations: Slides that “Do Something” Interactively The “Control Panel” of Each File Using Hyperlinks in the Notes and Questions What Are the Numbers at the Screen’s Lower Left? How You Can Test Yourself Plunging Right In: A “Road Test” Based on Ch. 1 End Tutorial © Goetz & Lambert, 2013

3 Read This First These slide sets don’t work exactly like what you might be used to in “ordinary” Powerpoint presentations. They use some technical “tricks” to make Law School classroom use smoother, more time-effective, and more flexible. Unless you are already familiar with the techniques used here, it is advisable to follow the Main Menu hyperlinks in the order in which they are listed. This slide presentation uses a subset of material based on Chapter 1 (we say “based on” because the demo is not quite the same as the current 5th edition’s Ch. 1 material.) The idea is that you can “road test” how the real stuff works. If you are considering using the real slides, it is very important that you first read the document entitled “An Instructor’s Guide to Using The GML Slides,” which is downloadable from the restricted Professors’ area of the gm-antitrustlaw.com support website. That website also is the source for the full sets of slides, chapter-by-chapter and section-by-section. When you have read the above, click on the Return navigation button in the lower right-hand corner. N Return to Main Menu © Goetz & Lambert, 2013

4 Multimedia Control Panel
The “Control Panel” slide of each file looks similar to this. Try each of the buttons to see what they do. (The greyed-out ones are disabled in this demo.) WHEN YOU ARE DONE, CLICK HERE TO RETURN TO THE TUTORIAL’S MAIN MENU. Multimedia Control Panel Countdown Session Marker Statutes Assignments A - Law and Econ Announcements Intro B - Overview Cases

5 Plunging In: Test Yourself
By now, you should know enough to get started using the slides. There’s no substitute for actual experience in moving around through one of these slide sets. So, the next step is to “test yourself” on a limited subset of the Chapter 1 material. Basically, the slides that you see will be the similar to the regular distribution set for Section B, i.e., Monopolization. To give just a little help, there will occasionally be “prompts” or other informational boxes that will appear on the screen. If you get “lost” or can’t make something work, remember that you can always hit the Esc key to exit from the Powerpoint presentation. Then, if you want, you can use the main Menu to navigate here again and try to pick up where you went off the track Yes, I’m Ready to Plunge In. Let’s Go! Take Me Back to the Main Menu. © Goetz & Lambert, 2013

6 If you came here from the opening title slide, you have already used a “navigation” button. This is one of the ways of moving to another slide.

7 The right arrow button always triggers a move to the next slide
The right arrow button always triggers a move to the next slide. In many Powerpoint presentations, a mouse click will do the same thing. But not here. Try it! (We have good reasons for forcing the use of only navigation buttons.)

8 Other Kinds of Navigation Buttons
Just as the right arrow button always triggers a move to the next slide, a left arrow button will move backwards one slide. (You probably ought to try it, then just navigate forward to get back to this present slide.) Continue

9 Other Kinds of Navigation Buttons
There are several other kinds of navigation buttons in these slides. The first three below are slightly different types of “go back where you just came from” buttons. The last two are specific-location links. This simple “go back” button will redisplay the last slide viewed. (Try it, then come back here.) This more complex form of “go back” will take you back to a starting point that may not the last slide viewed but is a single known destination. Similar to the above, except a “return” button can return to more than one starting point. Return A labeled button that takes you to a particular topical slide or sequence. (In this example, it’s a three-slide illustrative sequence. Try it, then come back here.) Link to some topic A “home” button will take you “back to the beginning,” normally the first slide in the file. Use it when you are done! Return

10 First Slide Of A 3-Slide Sequence
1 Navigate around in the sequence, then use the return button to go back to where you came from in the “How To” tutorial. Return © Goetz & Lambert, 2013

11 Second Slide Of A 3-Slide Sequence
2 Navigate around in the sequence, then use the return button to go back to where you came from in the “How To” tutorial. Return © Goetz & Lambert, 2013

12 Third Slide Of A 3-Slide Sequence
Navigate around in the sequence, then use the return button to go back to where you came from in the “How To” tutorial. Return © Goetz & Lambert, 2013

13 A. The Law and Economics of Antitrust
1. The “Why and How” of the Cournotia Model 2. Analytic Extensions and Formalizations 3. Premises: Economic Modeling and Legal Reasoning The most powerful way of navigating the slides is via hyperlinks. Although it is not obvious from just looking at this slide, each of the numbered items above is a hyperlink that takes you “somewhere else” in much the same fashion as a web browser does when you click on its links. © Goetz & Lambert, 2013

14 A. The Law and Economics of Antitrust
1. The “Why and How” of the Cournotia Model 2. Analytic Extensions and Formalizations 3. Premises: Economic Modeling and Legal Reasoning Move the mouse cursor over each of the numbered lines. When the cursor is over a link, it changes shape, to a tiny hand. Try it now. (But do not actually click on any of the links.) © Goetz & Lambert, 2013

15 A. The Law and Economics of Antitrust
1. The “Why and How” of the Cournotia Model 2. Analytic Extensions and Formalizations 3. Premises: Economic Modeling and Legal Reasoning When you’re ready, click on the navigation button to continue. © Goetz & Lambert, 2013

16 A. The Law and Economics of Antitrust
1. The “Why and How” of the Cournotia Model 2. Analytic Extensions and Formalizations 3. Premises: Economic Modeling and Legal Reasoning Now, let’s actually use some of the hyperlinks. A big advantage of hyperlinks is that you don’t have to use them in the order that they appear –or even use them at all if you want to skip that topic! Click on each of the links, in any order, and follow the directions to get back to this “menu” slide. © Goetz & Lambert, 2013

17 A. The Law and Economics of Antitrust
1. The “Why and How” of the Cournotia Model 2. Analytic Extensions and Formalizations 3. Premises: Economic Modeling and Legal Reasoning AFTER YOU TEST EACH OF THE LINKS ABOVE, USE THIS NAVIGATION BUTTON TO TAKE YOU TO THE TUTORIAL’S NEXT SLIDE © Goetz & Lambert, 2013

18 Using a “Menu” Slide You now know the fundamentals of both navigation buttons and hyperlinks. Therefore, it’s time to exploit this knowledge by using the same type of “menu” that is used in the actual slide sets. As you have already experienced, this tutorial’s Main Menu is a set of hyperlinks that correspond to various topics in this tutorial. By clicking on those hyperlinks, you can move directly to the indicated topics. You should do them in the sequence indicated. However, you have already done the first couple of topics. Therefore, you should start with the first uncovered topic. Are you beginning to see that using the GML slides is similar to accessing a website with a browser? Instead, conventional Powerpoints are more like using a slide projector in lockstep order. T There are two ways of getting back from here to the Menu. If you press the home button below, it will take you all the way back to the title slide of this tutorial. Then, you should select the Menu button on the left of the title slide. Instead, you can use the labeled button below that will take you directly to the Menu. The choice is yours; pick one and click! Menu © Goetz & Lambert, 2013

19 This is just a “dummy” hyperlink!
If it were a real hyperlink, it would have taken you to the destination indicated on the hyperlink’s label. In this case, you’ll just be automatically returned (in a few seconds) to the slide on which you clicked the hyperlink.

20 “Return” button takes you back to the “Main Menu”
Animations Demo Menu [Remember, the bulleted items in this menu are clickable hyperlinks.] Animation Used to Highlight Parts of an Exhibit Animation Used to Highlight Words or Phrases in a Case or Statute Animation Used to Display a Bulleted List of Points to be (Possibly) Discussed Multiple Animation Slides Used to Create a Diagram or Graphic and Explain It Bear in mind the rules for using a slide with animations: If there is no navigation button visible, then the slide is waiting for a click to advance to the next animation step. Once the navigation button appears, the current slide’s animation is done and the button will take you to the next slide in the sequence (or return you to the calling menu). “Return” button takes you back to the “Main Menu” © Goetz & Lambert, 2013

21 Numbers in the Lower-left Corner of the Screen
The number that you see has two parts. The prefix identifies the Powerpoint file that is being used. Usually, this prefix is descriptive; e.g., the present file is HT because this is the “How To” slide set. The number tells you which slide number in the set is being displayed. And what are the numbers good for. Several things. First, they can be used for “direct access” navigation by, during a slide show, typing in a slide number and pressing [Enter]. Try it by typing 2 and then [Enter]. You will go directly to the Main Menu Screen. If you just remember this slide’s number you can come directly back here by using the same process in reverse. Using Powerpoint’s “handout” printing menu, one can create 6-to-a-page thumbnails of each slide that show the slide numbers. Some instructors like to use the resulting thumbnail guide to the slide set as a direct access supplement to the hyperlinks. Second, you can offer to distribute selected slides to you students upon request for a particular slide. (Remember, your license to use these slides does not permit you to distribute entire slide sets; you must treat the slide sets as restricted material, similar to a Teacher’s Manual.) © Goetz & Lambert, 2013

22 Instructions for Animated Slides
(1) (2) (3) (4) $ Price Quantity $ Revenue $ Change These are the four columns of numbers in Exhibit 1, the Cournotia model that starts on p. 1 of the text. While discussing the Exhibit in class, it is useful to focus the students’ interest on each column sequentially. This will be done by highlighting the columns in different colors. The different colors are useful in allowing to instructor to refer back to, for instance, “The yellow-highlighted Quantity information in column 2.” When you get to the next slide, click on any blank part of the screen to begin the animation. Each click will highlight another column. When the animation is done, you will see the navigation button appear in the lower right-hand corner. This signals you that all of the “action” is done on the current slide. Use the navigation button when you are ready to begin.

23 Auto-transition in progress…

24 Animation Demo #1, Prompted
(1) (2) (3) (4) $ Price Quantity $ Revenue $ Change [Mouse-click to trigger the next step of the animation.] [Appearance of the navigation buttons indicates that the animation is complete. In this example, the buttons allow you either to go back to the last menu, or to re-do this animation.] Re-do Animation

25 Animation Demo #1, Prompted
(1) (2) (3) (4) $ Price Quantity $ Revenue $ Change [Mouse-click to trigger the next step of the animation.] [Appearance of the navigation buttons indicates that the animation is complete. In this example, the buttons allow you either to go back to the last menu, or to re-do this animation.] Re-do Animation

26 Restricted-link Demo Custom Shows Start Here
Comment Slide Restricted-link Demo Custom Shows Start Here © Goetz & Lambert, 2013

27 Multimedia Control Panel
All of the buttons on this control panel are enabled. You can simulate a real session by following the buttons, starting with Intro. WHEN YOU ARE DONE, CLICK HERE TO RETURN TO THE TUTORIAL’S MAIN MENU. Multimedia Control Panel Countdown Session Marker Statutes Assignments A - Law and Econ Announcements Intro B - Overview Cases

28 10-Second Countdown

29 Current Reading Assignments
# Begin End Comment 1 4 The Sale of Mineral Water in Cournotia; also scan §§ 1 & 2 Sherman, 4 & 7 Clayton, 5 FTC, all in  Appendix A. 2 12 Analytic Extensions and Formalizations 3 24 Monopolization; Aspen Skiing  38 Vertical Restraints; Graphic Products Distributors v. Itek 5 57 Conspiracy; Rothery Storages & Van v. Adams Van Lines 6 76 Mergers, Errors; Requirements for Private Recovery You can edit this slide appropriately if you wish to display the current reading assignments. © Goetz & Lambert, 2013

30 Session Marker The “Session Marker” Button is temporarily assigned to this slide as a default condition. The purpose of that button is, however, to give the instructor the option of reassigning the button, after each class, to the slide where the next class should begin. Of course, the proper slide may also be accessed by the standard menu system. However, the Session Marker button does provide a convenient option for those instructors who may desire to start a class session via direct access to a particular slide. If this option holds no interest for you, it is not necessary to change this current default setting. Just ignore the button. © Goetz & Lambert, 2013

31 Announcements The “Announcements” Button is temporarily assigned to this slide as a default condition. The purpose of that button is, however, to give the instructor the option of editing this present text block to contain an announcement for a particular class session. If you do not have a need for the Announcements feature, it is not necessary to change this current default setting. Just ignore the button and leave this template slide in its current position. © Goetz & Lambert, 2013

32 Current Chapter’s Table of Contents
A. The Law And Economics of Antitrust 1. The Sale of Mineral Water in Cournotia 2. Some Analytic Extensions and Formalizations 3. Assumptions and Premises: Economic Modeling and Legal Reasoning B. An Overview of Antitrust In The Courts (The “Chapter Table of Contents” is usually fully hyperlinked. In this demo only the main subsections, A & B-1, are enabled.) 1. Monopolization Aspen Skiing Co. v. Aspen Highlands Skiing (1985) Note: “Refusals to Deal” As Antitrust Violations 2. Vertical Restraints Graphic Products Distributors v. Itek Corp. (1983) Note: Lawyering Errors and Antitrust Liability Note: Copperweld Corp. v. Independence Tube Corp. 3. Conspiracy to Restrain Trade Rothery Storage & Van Co. v. Atlas Van Lines (1986) Note: Market Power, Monopoly Power, and “Filters” 4. Injury to Competition Through Mergers United States v. Waste Management, Inc. (1984) Note: Balancing Types of Errors in Antitrust 5. Special Requirements for Private Recovery Mid-Michigan Radiology Assocs. v. Central Mich. Comm. Hosp. (1995) Note: The Art of “Pigeonholing” in Antitrust © Goetz & Lambert, 2013

33 A. The Law and Economics of Antitrust
1. The “Why and How” of the Cournotia Model 2. Analytic Extensions and Formalizations 3. Premises: Economic Modeling and Legal Reasoning Chapter Table of Contents © Goetz & Lambert, 2013

34 1. The Sale of Mineral Water in Cournotia
The Why and How of this Model Exhibit 1: Tabular Model (p. 1) Exhibit 2: Effect of “Chiselers” on Conspiracy (p. 3) Notes and Questions (p. 4) USE THIS BUTTON TO RETURN WHERE YOU CAME FROM © Goetz & Lambert, 2013

35 2. Analytic Extensions and Formalizations
Translation into Graphical Models Exhibit 3: Graphical Models (p. 5) The Dilemma of Rivalistic Behavior Exhibit 4: Market Spoilage and Expansion (p. 7) Notes and Questions (pp. 9-10) USE THIS “RETURN” BUTTON TO TAKE YOU BACK TO THE LAST MENU © Goetz & Lambert, 2013

36 3. Assumptions and Premises
a. Assumptions in Social Science b. Economic Efficiency: Fundamental Premise of Antitrust? USE THIS “RETURN” BUTTON TO TAKE YOU BACK TO THE LAST MENU © Goetz & Lambert, 2013

37 B. An Overview of Antitrust in the Courts
1. Monopolization 2. Vertical Restraints The greyed-out hyperlinks are not fully enabled in this demo. 3. Conspiracy to Restrain Trade 4. Injury to Competition Through Mergers 5. Special Requirements for Private Recovery Overview Diagram Chapter TC © Goetz & Lambert, 2013

38 Aspen Skiing: The slippery slope to monopoly???
1. Monopolization Aspen Skiing: The slippery slope to monopoly??? Note on “Refusals to Deal” Chapter TC B. Overview © Goetz & Lambert, 2013

39 The greyed-out links are disabled in this demo.
Administrative Things Why Study Antitrust Law? The greyed-out links are disabled in this demo. Is Economics Important? Getting Ready to Start Roadmapping Statutes © Goetz & Lambert, 2013

40 Principal Antitrust Statutes Treated
(See Appendix A for statutory texts) OVERV I EW CASES Sec. 1 Sherman Act Anticompetitive Agreements On this slide, you need to check for hyperlinks. Sec. 2 Sherman Act: Monopolization Sec. 3 Clayton Act Conditioning of Sales Robinson-Patman Act Price Discrimination Sec. 4 Clayton Act Civil Treble Damage Suits Sec. 7 Clayton Act Anticompetitive Mergers Sec. 5 FTC Act Anticompetitive Practices Return

41 Sec. 1, Sherman Act: Collusion
Every contract, combination . . ., or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . Every contract, combination . . ., or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . Every contract, combination . . ., or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . Every contract, combination . . ., or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . © Goetz & Lambert, 2013

42 Sec. 1, Sherman Act: Collusion
Every contract, combination . . ., or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . Every contract, combination . . ., or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . Every contract, combination . . ., or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . Every contract, combination . . ., or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . © Goetz & Lambert, 2013

43 Sec. 2, Sherman Act: Monopolization
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . Monopolization It is illegal to be an actual monopolist And likewise to attempt to become one Either by unilateral conduct or by combination Attempted Monopolization Conspiracy to Monopolize © Goetz & Lambert, 2013

44 Sec. 2, Sherman Act: Monopolization
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . Monopolization It is illegal to be an actual monopolist And likewise to attempt to become one Either by unilateral conduct or by combination Attempted Monopolization Conspiracy to Monopolize © Goetz & Lambert, 2013

45 Sec. 3, Clayton Act: Illegal Conditioning
Tying: You can’t purchase Product A from me unless you also buy Product B from me. Exclusive Dealing: You can’t have Product A from me unless you get it only from me. It shall be unlawful to lease or make a sale or contract for sale on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce. It shall be unlawful to lease or make a sale or contract for sale on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce. It shall be unlawful to lease or make a sale or contract for sale on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce. © Goetz & Lambert, 2013

46 Sec. 3, Clayton Act: Illegal Conditioning
Tying: You can’t purchase Product A from me unless you also buy Product B from me. Exclusive Dealing: You can’t have Product A from me unless you get it only from me. It shall be unlawful to lease or make a sale or contract for sale on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce. It shall be unlawful to lease or make a sale or contract for sale on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce. It shall be unlawful to lease or make a sale or contract for sale on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce. © Goetz & Lambert, 2013

47 Sec. 4, Clayton Act: Civil Suits
The civil cause of action itself. Punitive damages equal to twice the compensatories. Recovery of costs and attorney’s fees. (a) [A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee. (a) [A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee. (a) [A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee. © Goetz & Lambert, 2013

48 Sec. 4, Clayton Act: Civil Suits
The civil cause of action itself. Punitive damages equal to twice the compensatories. Recovery of costs and attorney’s fees. (a) [A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee. (a) [A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee. (a) [A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee. © Goetz & Lambert, 2013

49 Sec. 7, Clayton Act: Mergers
No person shall acquire, directly or indirectly, the whole or any part of the stock or the assets of another person . . ., where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. No person shall acquire, directly or indirectly, the whole or any part of the stock or the assets of another person . . ., where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. No person shall acquire, directly or indirectly, the whole or any part of the stock or the assets of another person . . ., where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. © Goetz & Lambert, 2013

50 Sec. 7, Clayton Act: Mergers
No person shall acquire, directly or indirectly, the whole or any part of the stock or the assets of another person . . ., where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. No person shall acquire, directly or indirectly, the whole or any part of the stock or the assets of another person . . ., where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. No person shall acquire, directly or indirectly, the whole or any part of the stock or the assets of another person . . ., where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. © Goetz & Lambert, 2013

51 Sec. 5, Federal Trade Commission Act
(1) Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful. (1) Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful. (2) The Commission is empowered and directed to prevent persons, partnerships, or corporations from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce © Goetz & Lambert, 2013

52 Sec. 5, Federal Trade Commission Act
(1) Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful. (1) Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful. (2) The Commission is empowered and directed to prevent persons, partnerships, or corporations from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce © Goetz & Lambert, 2013

53 The Overview Cases in Chapter 1, Section B
Sec. 2 Sherman Act: Monopolization Aspen Skiing Co. v. Aspen Highlands Skiing Co. Graphics Products Distributors, Inc. v. Itek Corp. Vertical Restraints Sec. 1 Sherman Act Anticompetitive Agreements Rothery Storage and Van Co. v. Atlas Van Lines Horizontal Restraints Sec. 7 Clayton Act Anticompetitive Mergers United States . v. Waste Management, Inc. Mid-Michigan Radiology v. Central Michigan Community Hospital Sec. 4 Clayton Act Civil Treble Damage Suits © Goetz & Lambert, 2013

54 The Overview Cases in Chapter 1, Section B
Sec. 2 Sherman Act: Monopolization Aspen Skiing Co. v. Aspen Highlands Skiing Co. Graphics Products Distributors, Inc. v. Itek Corp. Vertical Restraints Sec. 1 Sherman Act Anticompetitive Agreements Rothery Storage and Van Co. v. Atlas Van Lines Horizontal Restraints Sec. 7 Clayton Act Anticompetitive Mergers United States . v. Waste Management, Inc. Mid-Michigan Radiology v. Central Michigan Community Hospital Sec. 4 Clayton Act Civil Treble Damage Suits © Goetz & Lambert, 2013

55 The “Cournotia” Hypothetical: Why and How
[To “step through” this animated slide, mouse-click until you see a navigation button.] One of three simple economic “models” that permeate the course. Cournotia model of collusion; Ch. 1 (Price-fixing via cartelization) “Dominant Firm” model of unilateral behavior; Ch. 4 (Monopolization) “Principal-Agent” model of vertical relationships; Ch. 5 (Vertical Restraints) The Cournotia model explains, right at the outset, the economic concerns that are the underlying rationale of the antitrust laws. The model is first developed in very simple terms: a table of numbers and the assumption of zero production costs. Then, some additional wrinkles are added. Formalization and translation into graphical models. Indication of the importance of production and entry. Coming Next! © Goetz & Lambert, 2013

56 The “Cournotia” Hypothetical: Why and How
[To “step through” this animated slide, mouse-click until you see a navigation button.] One of three simple economic “models” that permeate the course. Cournotia model of collusion; Ch. 1 (Price-fixing via cartelization) “Dominant Firm” model of unilateral behavior; Ch. 4 (Monopolization) “Principal-Agent” model of vertical relationships; Ch. 5 (Vertical Restraints) The Cournotia model explains, right at the outset, the economic concerns that are the underlying rationale of the antitrust laws. The model is first developed in very simple terms: a table of numbers and the assumption of zero production costs. Then, some additional wrinkles are added. Formalization and translation into graphical models. Indication of the importance of production and entry. Coming Next! © Goetz & Lambert, 2013

57 Cournotia Note Questions 1 thru 6, p. 4
1. For each one-unit change in the quantity of mineral water offered for sale, how much can the market price be expected to change? [See the "demand equation" set forth in footnote 2.] What is the common sense explanation of this price decline? 2. How have columns (3) and (4) of Exhibit 1 have been calculated? (Confirm that the numbers are correct.) Some of the questions are hyperlinked. Clinking on them triggers a “Discussion Slide.” 3. If a single entity owned all the springs, what would be the profit-maximizing output and price of the mineral water? 4. Absent any agreement among the landowners, how much mineral water will be offered for sale and at what price? Why does this happen? 5. Suppose that the 10 landowners wished to form a "cartel" to fix the price and output of mineral water. What can be said about the output and price terms of their agreement? How much better off (in profit terms) would they be than in the "competitive" situation? 6. Assume that one owner remains outside the agreement. Is she better or worse off? By how much? Do you think that a successful agreement is likely? © Goetz & Lambert, 2013

58 Cournotia Note Questions 7 thru 10, p. 4
7. Other than an agreement to restrain competition among themselves, what other strategies might lead to greater profits for the mineral spring owners? 8. From your present knowledge of the law, are any of the above profit-enhancing strategies actionable under the U.S. antitrust laws? If so, under what provision(s)? 9. From a distributive standpoint, who gains and who loses if the various forms of competitive restraint are successfully implemented? 10. From an "economic efficiency" standpoint, are there any net gains or losses from the forms of restraint that you have analyzed? © Goetz & Lambert, 2013

59 $ Price Quantity $ Revenue $ Change
(1) (2) (3) (4) $ Price Quantity $ Revenue $ Change Exhibit 1 in the textbook Textbook’s Exhibit 1 © Goetz & Lambert, 2013

60 THE MODEL (1) (2) (3) (4) $ Price Quantity $ Revenue $ Change
© Goetz & Lambert, 2013

61 THE MODEL (1) (2) (3) (4) $ Price Quantity $ Revenue $ Change
© Goetz & Lambert, 2013

62 Answer to Note Question 1
1. For each one-unit change in the quantity of mineral water offered for sale, how much can the market price be expected to change? [See the "demand equation" set forth in footnote 2.] What is the common sense explanation of this price decline? The exact equation of the demand curve in its standard form is Q = P, where Q is the total quantity of mineral demanded at price P. You may understand this better by re-casting the demand equation to show the sustainable price as a function of industry output: P = (220/125) - (1/125)Q or P = Q. This latter formulation yields the "downward sloping demand curve" familiar to many from elementary economics textbooks. (1) (2) $ Price Quantity -.04 Price Change +5.0 Quant. Change = Rate of Change -.04 +5.00 -.04 +5.00 -.04 +5.00 -.04 +5.00 -.04 +5.00 -.04 +5.00 -.04 +5.00 Demand Curve © Goetz & Lambert, 2013

63 Answer to Note Question 1
1. For each one-unit change in the quantity of mineral water offered for sale, how much can the market price be expected to change? [See the "demand equation" set forth in footnote 2.] What is the common sense explanation of this price decline? The exact equation of the demand curve in its standard form is Q = P, where Q is the total quantity of mineral demanded at price P. You may understand this better by re-casting the demand equation to show the sustainable price as a function of industry output: P = (220/125) - (1/125)Q or P = Q. This latter formulation yields the "downward sloping demand curve" familiar to many from elementary economics textbooks. (1) (2) $ Price Quantity -.04 Price Change +5.0 Quant. Change = Rate of Change -.04 +5.00 -.04 +5.00 -.04 +5.00 -.04 +5.00 -.04 +5.00 -.04 +5.00 -.04 +5.00 Demand Curve © Goetz & Lambert, 2013

64 Demand Curve Price Quantity Demand Curve 2.00 1.50 1.00 0.50 0.00 20
20 40 60 80 100 120 140 160 180 200 Quantity Return © Goetz & Lambert, 2013

65 Answer to Note Question 2, p.2
2. How have columns (3) and (4) of Exhibit 1 been calculated? (Confirm that the numbers are correct.) (1) (2) (3) (4) $ Price Quantity $ Revenue $ Change Price * Quantity = Revenue 1.00 * = 0.96 * = 0.92 * = 0.88 * = 0.84 * = 0.80 * = 0.76 * = © Goetz & Lambert, 2013

66 Answer to Note Question 2, p.2
2. How have columns (3) and (4) of Exhibit 1 been calculated? (Confirm that the numbers are correct.) (1) (2) (3) (4) $ Price Quantity $ Revenue $ Change Price * Quantity = Revenue 1.00 * = 0.96 * = 0.92 * = 0.88 * = 0.84 * = 0.80 * = 0.76 * = © Goetz & Lambert, 2013

67 Answers to Note Questions 3 and 4
(1) (2) (3) (4) $ Price Quantity $ Revenue $ Change Single Answers to Note Questions 3 and 4 Single? Ten? Q5-Cartel Ten © Goetz & Lambert, 2013

68 Answer to Note Question 5
(1) (2) (3) (4) $ Price Quantity $ Revenue $ Change .88*11= 9.68 [?] Answer to Note Question 5 Cartel Result??? .16*20=3.20 © Goetz & Lambert, 2013

69 What happens if someone chisels?
Price Quantity $ Revenue $ Change Chiseler’s Additional 9 .88*11= 9.68 ? Price Falls by 9*.008 as Output rises by 9 .808*20= 16.20 .808*11= 8.88 Unpacking Exhibit 2 © Goetz & Lambert, 2013

70 What happens if someone chisels?
Price Quantity $ Revenue $ Change Chiseler’s Additional 9 .88*11= 9.68 ? Price Falls by 9*.008 as Output rises by 9 .808*20= 16.20 .808*11= 8.88 Unpacking Exhibit 2 © Goetz & Lambert, 2013

71 Discussion: Note Questions 7 and 8
7. Other than an agreement to restrain competition among themselves, what other strategies might lead to greater profits for the mineral spring owners? 8. From your present knowledge of the law, are any of the above profit-enhancing strategies actionable under the U.S. antitrust laws? If so, under what provision(s)? Sec. 1 Sherman Act Anticompetitive Agreements Sec. 2 Sherman Act: Monopolization Sec. 7 Clayton Act Anticompetitive Mergers © Goetz & Lambert, 2013

72 Discussion: Note Questions 7 and 8
7. Other than an agreement to restrain competition among themselves, what other strategies might lead to greater profits for the mineral spring owners? 8. From your present knowledge of the law, are any of the above profit-enhancing strategies actionable under the U.S. antitrust laws? If so, under what provision(s)? Sec. 1 Sherman Act Anticompetitive Agreements Sec. 2 Sherman Act: Monopolization Sec. 7 Clayton Act Anticompetitive Mergers © Goetz & Lambert, 2013

73 Discussion: Note Questions 9 and 10
9. From a distributive standpoint, who gains and who loses if the various forms of competitive restraint are successfully implemented? 10. From an "economic efficiency" standpoint, are there any net gains or losses from the forms of restraint that you have analyzed? In money terms, the producers receive more money, all of which is profit to them. In money terms, is the consumers’ loss (from the higher price) exactly equal to the producers’ gain above? Less mineral water is consumed. Is this a clear social loss or “waste”? © Goetz & Lambert, 2013

74 Discussion: Note Questions 9 and 10
9. From a distributive standpoint, who gains and who loses if the various forms of competitive restraint are successfully implemented? 10. From an "economic efficiency" standpoint, are there any net gains or losses from the forms of restraint that you have analyzed? In money terms, the producers receive more money, all of which is profit to them. In money terms, is the consumers’ loss (from the higher price) exactly equal to the producers’ gain above? Less mineral water is consumed. Is this a clear social loss or “waste”? © Goetz & Lambert, 2013

75 Unpacking Exhibit 2 Exhibit 2 as it appears in the Casebook
Exhibit 2’s Explanatory Footnote Gn, the gain to a single non-conspirator Cf. NQ6 Rc, the gain to the entire conspirator group Gc, the gain to an average member of the conspirator group What does Exhibit 2 demonstrate about the compatibility between price-fixing and chiselers? Return © Goetz & Lambert, 2013

76 Exhibit 2 As It Appears in the Textbook
© Goetz & Lambert, 2013

77 Exhibit 2 (p.3): Effect of “Chiselers” on a Price-Fixing Conspiracy
Number of Conspirators in the Agreement ----- Market Data Price Quant Rev Gn Rc Gc Rc Gc Rc Gc Rc Gc * * * * Exhibit 2 (p.3): Effect of “Chiselers” on a Price-Fixing Conspiracy © Goetz & Lambert, 2013

78 Exhibit 2, Footnote Gn, the revenue collected by any non-conspirator is always the market price times 20, the maximum amount a non-conspirator is able to place on the market. Therefore, Gn is 20 x 1.00 = in row 1 of the table, 20 x .96 in row 2, 20 x .92 in row 3, etc. The conspiratorial group gets to collect the market price only on the residual amount that can be sold after subtracting the total already offered by the non-conspirator(s). (If the conspirators tried to sell any more than that, the assumed market price would not be achievable.) In row 1, then, Rc is [95 - (1 x 20)] x 1.00 = when there is one non-conspirator, [95 - (2 x 20)] x 1.00 = when there are two conspirators, etc. Finally, Gc, the average amount available to a single conspirator, is simply the conspirators' total revenues divided by the number of conspirators or, in row 1, 75/9, 55/8, etc. © Goetz & Lambert, 2013

79 Exhibit 2 Explanation: The Gn Column
Number of Conspirators in the Agreement ----- Price Quant Rev Gn Rc Gc Rc Gc Rc Gc Rc Gc * * * * Chiseler Exhibit 2 Explanation: The Gn Column © Goetz & Lambert, 2013

80 Exhibit 2: Explanation: Calculating Rc with 9 Conspirators
Number of Conspirators in the Agreement ----- Price Quant Rev Gn Rc Gc Rc Gc Rc Gc Rc Gc * * * * Calculating the Rc Column [Q - (20*n)] * Price = Rc [95 - (20*1) ] * 1.00 = 75.00 [100- (20*1) ] * = 76.80 [105- (20*1) ] * .92 = 78.20 [110 - (20*1)] * = 79.20 With 8 Conspiratiors Exhibit 2: Explanation: Calculating Rc with 9 Conspirators © Goetz & Lambert, 2013

81 Exhibit 2 Explanation: Calculating Rc with 8 Conspirators
Number of Conspirators in the Agreement ----- Price Quant Rev Gn Rc Gc Rc Gc Rc Gc Rc Gc * * * * Calculating the Rc Column [Q - (20*n)] * Price = R [95 - (20*2) ] * 1.00 = 55.00 [100- (20*2) ] * = 57.60 [105- (20*2) ] * .92 = 59.80 [110 - (20*2)] * = 61.60 Exhibit 2 Explanation: Calculating Rc with 8 Conspirators © Goetz & Lambert, 2013

82 Average Gain to Member of Conspiracy?
Just divide the group’s total gain by the number of conspirators! © Goetz & Lambert, 2013

83 Exhibit 2 Explanation: Calculating Gc with 8 Conspirators
Number of Conspirators in the Agreement ----- Price Quant Rev Gn Rc Gc Rc Gc Rc Gc Rc Gc * * * * Calculating the Gc Column 55.00 ÷ 8 = 6.88 57.60 ÷ 8 = 7.20 59.80 ÷ 8 = 7.48 61.60 ÷ 8 = 7.70 Exhibit 2 Explanation: Calculating Gc with 8 Conspirators © Goetz & Lambert, 2013

84 Market Power with “Competitive Fringe” Firm(s)
© Goetz & Lambert, 2013

85 Market Power with “Competitive Fringe” Firm(s)
© Goetz & Lambert, 2013

86 Exhibit 3, p. 6, as it appears in the textbook.
2.00 1.50 Demand Curve .88 1.00 Price Zoom Marginal Revenue 0.50 0.00 20 40 60 80 100 120 140 160 180 200 Quantity -0.50 -1.00 -1.50 100 90 Zoom 80 70 60 Total Revenue 50 Total Revenue 40 30 20 10 20 40 60 80 100 120 140 160 180 200 Quantity © Goetz & Lambert, 2013

87 Exhibit 3, Lower Panel Only
10 20 30 40 50 60 70 80 90 100 Total Revenue Total Revenue 20 40 60 80 100 120 140 160 180 200 Original Exhibit 3 © Goetz & Lambert, 2013

88 Exhibit 3, Upper Panel Only
2.00 1.50 Demand Curve 1.00 .88 Price Marginal Revenue 0.50 0.00 20 40 60 80 100 120 140 160 180 200 Quantity -0.50 -1.00 -1.50 Original Exhibit 3 © Goetz & Lambert, 2013

89 Exhibit 3, Upper Panel Only
2.00 1.50 Demand Curve 1.00 .88 Price Marginal Revenue 0.50 0.00 20 40 60 80 100 120 140 160 180 200 Quantity -0.50 -1.00 -1.50 Original Exhibit 3 © Goetz & Lambert, 2013

90 Why do firms “spoil the market”?

91 Textbook Version of Exhibit 4, p. 7: Market Spoilage and Expansion
10 20 30 40 50 60 70 80 90 100 110 120 Quantity 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 Price Expansion Market Spoilage .80 .88 Demand Curve © Goetz & Lambert, 2013

92 Exhibit 4a: Explanation of Market Spoilage and Expansion
1.00 0.90 Demand Curve .88 0.80 Price Is Depressed by Quantity Increase 0.70 0.60 Price 0.50 0.40 Supply Expands By 10 0.30 0.20 0.10 0.00 10 20 30 40 50 60 70 80 90 100 110 120 Quantity © Goetz & Lambert, 2013

93 Exhibit 4b: (Expansion) Revenue from New Sales at Lower Price
1.00 0.90 Demand Curve .88 0.80 .80 0.70 0.60 Price 0.50 Expansion 0.40 0.30 0.20 0.10 0.00 10 20 30 40 50 60 70 80 90 100 110 120 Quantity © Goetz & Lambert, 2013

94 Exhibit 4c: Market Spoilage and Expansion Summarized
10 20 30 40 50 60 70 80 90 100 110 120 Quantity 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 Price Expansion Market Spoilage .80 .88 Demand Curve Expansion Effect minus Market Spoilage Net Revenue Change © Goetz & Lambert, 2013

95 Exhibit 4c: Market Spoilage and Expansion Summarized
10 20 30 40 50 60 70 80 90 100 110 120 Quantity 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 Price Expansion Market Spoilage .80 .88 Demand Curve Expansion Effect minus Market Spoilage Net Revenue Change © Goetz & Lambert, 2013

96 Influence of Demand Curve’s Shape on Market Spoilage and Expansion
1.00 Demand Curve 0.90 .88 Market Spoilage 0.80 .80 0.70 0.60 Price 0.50 Expansion 0.40 0.30 0.20 0.10 0.00 10 20 30 40 50 60 70 80 90 100 110 120 Quantity © Goetz & Lambert, 2013

97 Influence of Demand Curve’s Shape on Market Spoilage
1.00 Demand Curve 0.90 .88 0.80 Market Spoilage 0.70 0.60 Price 0.50 0.40 Expansion 0.30 0.20 0.10 0.00 10 20 30 40 50 60 70 80 90 100 110 120 Quantity © Goetz & Lambert, 2013

98 Comparison © Goetz & Lambert, 2013

99 Influence of Demand Curve’s Shape on Market Spoilage and Expansion
1.00 Demand Curve 0.90 .88 Market Spoilage 0.80 .80 0.70 0.60 Price 0.50 Expansion 0.40 0.30 0.20 0.10 0.00 10 20 30 40 50 60 70 80 90 100 110 120 Quantity © Goetz & Lambert, 2013

100 Influence of Demand Curve’s Shape on Market Spoilage
1.00 Demand Curve 0.90 .88 0.80 Market Spoilage 0.70 0.60 Price 0.50 0.40 Expansion 0.30 0.20 0.10 0.00 10 20 30 40 50 60 70 80 90 100 110 120 Quantity Repeat © Goetz & Lambert, 2013

101 Influence of Demand Curve’s Shape on Market Spoilage
1.00 Demand Curve 0.90 .88 0.80 Market Spoilage 0.70 0.60 Price 0.50 0.40 Expansion 0.30 0.20 0.10 0.00 10 20 30 40 50 60 70 80 90 100 110 120 Quantity Repeat © Goetz & Lambert, 2013

102 Discussion: Note Questions 7 and 8
7. Other than an agreement to restrain competition among themselves, what other strategies might lead to greater profits for the mineral spring owners? 8. From your present knowledge of the law, are any of the above profit-enhancing strategies actionable under the U.S. antitrust laws? If so, under what provision(s)? Sec. 1 Sherman Act Anticompetitive Agreements Sec. 2 Sherman Act: Monopolization Sec. 7 Clayton Act Anticompetitive Mergers © Goetz & Lambert, 2013

103 Discussion: Note Questions 7 and 8
7. Other than an agreement to restrain competition among themselves, what other strategies might lead to greater profits for the mineral spring owners? 8. From your present knowledge of the law, are any of the above profit-enhancing strategies actionable under the U.S. antitrust laws? If so, under what provision(s)? Sec. 1 Sherman Act Anticompetitive Agreements Sec. 2 Sherman Act: Monopolization Sec. 7 Clayton Act Anticompetitive Mergers © Goetz & Lambert, 2013

104 Discussion: Note Questions 9 and 10
9. From a distributive standpoint, who gains and who loses if the various forms of competitive restraint are successfully implemented? 10. From an "economic efficiency" standpoint, are there any net gains or losses from the forms of restraint that you have analyzed? In money terms, the producers receive more money, all of which is profit to them. In money terms, is the consumers’ loss (from the higher price) exactly equal to the producers’ gain above? Less mineral water is consumed. Is this a clear social loss or “waste”? © Goetz & Lambert, 2013

105 Discussion: Note Questions 9 and 10
9. From a distributive standpoint, who gains and who loses if the various forms of competitive restraint are successfully implemented? 10. From an "economic efficiency" standpoint, are there any net gains or losses from the forms of restraint that you have analyzed? In money terms, the producers receive more money, all of which is profit to them. In money terms, is the consumers’ loss (from the higher price) exactly equal to the producers’ gain above? Less mineral water is consumed. Is this a clear social loss or “waste”? © Goetz & Lambert, 2013

106 Notes and Questions, Pp. 9-11
1, 2, 3, 4 – Influence of Costs 5, 6 – Feasibility of Entry 7 – Geographic Competition 8, 9 – Substitute Products, Cost Advantages 10, 11 – Barriers, Natural and Created © Goetz & Lambert, 2013

107 Assumptions and Premises Notes and Questions 1 thru 4, pp. 9-10
1. The purpose of this exercise is to vary the simplifying assumptions of Exhibit 1 and see what happens as a consequence. Hence, you should retain all of the original assumptions except those that you are explicitly asked to change in the separate questions below. 2. Suppose each spring has to be drilled open initially and then clogs up again after exactly 1000 days. Call this initial "start-up" cost $X. How high could the number X be for the 10 spring owners to operate profitably in this business without colluding? 3. If the cost of opening a single spring were $480, what would happen in the absence of collusion? How many springs would operate and at what price would they be selling? 4. For the competitors operating in accord with the data of question (3) immediately above, what would be the optimal collusive arrangement in terms of quantity sold per spring? How does this compare with the conclusions of the original Exhibit 1 model? Why? © Goetz & Lambert, 2013

108 Assumptions and Premises Notes and Questions 5 & 6, p. 10
5. Assume a deus ex machina that will enforce the optimal agreement hypothesized in (4) above by punishing any chiseling with lethal lightning bolts. What other threat now exists to the viability of the agreement? How much does it matter if there are (a) only 10 possible sites for springs to be drilled open or (b) a larger number (e.g., 30) of potential sites that could be opened? 6. How would the answers to each of the above questions be changed if it cost a total of 20 cents, including a fair rate of return on any funds invested, to collect and market each barrel of water? © Goetz & Lambert, 2013

109 Note Question 7, p. 10: Geographic Competition
7. Go back to all of the simple cost assumptions of the original Exhibit 1. Assume, however, that: Bertrandia is 10 miles from Cournotia and that the transport cost of a unit of mineral water is a quarter of a cent per mile. Bertrandia is a mirror image of Cournotia in every respect, including having 10 mineral springs exactly like those in Cournotia. The cartel-enforcing deus ex machina is once again operating, but only in Cournotia. What is the highest price that the Cournotian producers can charge before the Bertrandians can compete with them? Call this price the "entry-preventing price." Would it make sense for the Cournotians to try to exceed this price level? Why? The relevance of spatial competition from "foreign sources," plays a key role in the classic Alcoa case in Ch. 4, as well as in many other antitrust cases. As you read the cases, note that the law generally requires an antitrust complaint to identify both the relevant product market and the relevant geographic market. The concept of the entry-preventing price is important in the evaluation of mergers in Ch. 7. © Goetz & Lambert, 2013

110 Assumptions and Premises Questions 8 and 9, pp. 10-11
8. The last question alerted you to the issues that may arise with respect to geographic market. As we shall see, similar questions will arise in the proper legal, and economic, delineation of product markets. Even for the Cournotia scenario, the definition of "product" is perhaps less simple than it first seems. What forms of "entry," or other competition with the mineral-water producers, might arise from the sales of things other than mineral water itself? [Hint: Might some people regard wine as a substitute for mineral water? If the mineral springs in question produce "naturally carbonated" mineral water, could uncarbonated water be converted into carbonated? Which possibilities involve demand substitutability? Supply substitutability?] 9. Suppose that we were to reintroduce the cost conditions of question (6) above --both the drilling and the per unit costs-- but apply these costs only to Bertrandia. The effect of this would be that Cournotia has a considerable cost advantage over Bertrandia in the production of mineral water. How does this cost differential affect the prognosis for successful anticompetitive price-increases in Cournotia? © Goetz & Lambert, 2013

111 Assumptions and Premises Questions 10 and 11, p.11
10. If you were a Cournotian producer, what means could you employ to erect "barriers" to the entry of the Bertrandians into your market? Which, if any, of those barrier-erecting efforts offend the antitrust laws as you presently understand them? 11. What generalizations, even if only of a tentative nature, can you draw about the influence of costs and entry? © Goetz & Lambert, 2013

112 Over 1000 days, he would therefore earn: $3.20*1000=$3,200.
Discussion: Question 2 Recall, from Question 4 on p. 4 in the last section, that under competition, each landowner would earn $3.20/day from the 20 barrels sold at the competitive price of .16. Over 1000 days, he would therefore earn: $3.20*1000=$3,200. As long as the start-up costs are less than $3,200, it would be worthwhile for the landowner to operate a mineral water business. © Goetz & Lambert, 2013

113 Over 1000 days, he would therefore earn: $3.20*1000=$3,200.
Discussion: Question 2 Recall, from Question 4 on p. 4 in the last section, that under competition, each landowner would earn $3.20/day from the 20 barrels sold at the competitive price of .16. Over 1000 days, he would therefore earn: $3.20*1000=$3,200. As long as the start-up costs are less than $3,200, it would be worthwhile for the landowner to operate a mineral water business. © Goetz & Lambert, 2013

114 Discussion: Question 3 If cost of operating spring for the single owner is $480 per 1000 days --i.e., less than $ the spring owner will operate. Once she chooses to operate, there is no additional cost for producing more rather than fewer barrels. Thus, she will choose to produce the maximum possible 20 barrels. The other landowners will make similar calculations. Thus, as before, 200 barrels/day will be sold at a price of $.16. BUT now ”profit" is reduced by cost of $480/1000=$.48/day for each landowner. Thus, each landowner earns $.16*20-$.48=$2.72/day. The general conclusion is that fixed costs do not tell you how much to produce; only whether to produce at all. Once you have committed to producing, fixed costs are irrelevant --until renewal once again becomes necessary. “Bygones are bygones.” © Goetz & Lambert, 2013

115 What is the potential relevance of this to mergers or downsizing?
Discussion: Question 4 If all 10 springs operate, costs are ($480*10)/1000 = $4.80/day. Profits are ($.88*110) - $4.80 = $ $4.80 = $92. That’s $9.20/member, less than the $9.68/member in the zero-cost example. BUT because each spring can produce 20 barrels/day, and the profit maximizing output for the cartel is 110 barrels/day, cartel needs only 6 producing springs; 4 cartel members could close down. Costs then decline to ($480*6)/1000 = $2.88/day. Profits are $ $2.88 = $93.92, thus beating the $92 profit flow when all produce. Of course, the remaining daily costs ($2.88) would have to be shared equally among all the cartel members, even the ones who don't open their springs. (Would be approx. $.29/member.) Is this consistent with the notion that fixed costs do not determine production decisions? YES: for the cartel, these are not really "fixed" costs. The costs vary depending on how many springs operate. What is the potential relevance of this to mergers or downsizing? © Goetz & Lambert, 2013

116 What is the potential relevance of this to mergers or downsizing?
Discussion: Question 4 If all 10 springs operate, costs are ($480*10)/1000 = $4.80/day. Profits are ($.88*110) - $4.80 = $ $4.80 = $92. That’s $9.20/member, less than the $9.68/member in the zero-cost example. BUT because each spring can produce 20 barrels/day, and the profit maximizing output for the cartel is 110 barrels/day, cartel needs only 6 producing springs; 4 cartel members could close down. Costs then decline to ($480*6)/1000 = $2.88/day. Profits are $ $2.88 = $93.92, thus beating the $92 profit flow when all produce. Of course, the remaining daily costs ($2.88) would have to be shared equally among all the cartel members, even the ones who don't open their springs. (Would be approx. $.29/member.) Is this consistent with the notion that fixed costs do not determine production decisions? YES: for the cartel, these are not really "fixed" costs. The costs vary depending on how many springs operate. What is the potential relevance of this to mergers or downsizing? © Goetz & Lambert, 2013

117 Discussion: Cournotia Extensions Question 5
5. Assume a deus ex machina that will enforce the optimal agreement hypothesized in (4) above by punishing any chiseling with lethal lightning bolts. What other threat now exists to the viability of the agreement? How much does it matter if there are (a) only 10 possible sites for springs to be drilled open or (b) a larger number (e.g., 30) of potential sites that could be opened? This question raises the issue of entry by producers who are not now in the market, but could be –especially at a (higher) cartel price. © Goetz & Lambert, 2013

118 Discussion: Cournotia Extensions Question 5
5. Assume a deus ex machina that will enforce the optimal agreement hypothesized in (4) above by punishing any chiseling with lethal lightning bolts. What other threat now exists to the viability of the agreement? How much does it matter if there are (a) only 10 possible sites for springs to be drilled open or (b) a larger number (e.g., 30) of potential sites that could be opened? This question raises the issue of entry by producers who are not now in the market, but could be –especially at a (higher) cartel price. © Goetz & Lambert, 2013

119 Discussion: Cournotia Extensions Question 6
6. How would the answers to each of the above questions be changed if it cost a total of 20 cents, including a fair rate of return on any funds invested, to collect and market each barrel of water? This question introduces the very important concept of marginal costs, i.e., the 20 cents additional that each unit costs. There are two differences in the results now: The “entry” price must now cover both the fixed costs of opening a well plus the marginal costs per unit; Even if the fixed costs of the well are sunk, a firm would not want to operate if its marginal revenues per sale were less than the 20 cents marginal cost. © Goetz & Lambert, 2013

120 Discussion: Cournotia Extensions Question 6
6. How would the answers to each of the above questions be changed if it cost a total of 20 cents, including a fair rate of return on any funds invested, to collect and market each barrel of water? This question introduces the very important concept of marginal costs, i.e., the 20 cents additional that each unit costs. There are two differences in the results now: The “entry” price must now cover both the fixed costs of opening a well plus the marginal costs per unit; Even if the fixed costs of the well are sunk, a firm would not want to operate if its marginal revenues per sale were less than the 20 cents marginal cost. © Goetz & Lambert, 2013

121 Discussion, NQ, p. 10: Bertrandian Geographic Competition
Cents 1 2 3 4 5 6 7 8 9 10 12 14 16 18 20 At prices above Bertrandia producers can sell into the Cournotia Market “entry-preventing” prices 10*.25¢ =2.5¢ Distance © Goetz & Lambert, 2013

122 Discussion, NQ, p. 10: Bertrandian Geographic Competition
Cents 1 2 3 4 5 6 7 8 9 10 12 14 16 18 20 At prices above Bertrandia producers can sell into the Cournotia Market “entry-preventing” prices 10*.25¢ =2.5¢ Distance © Goetz & Lambert, 2013

123 Discussion: Question 8 © Goetz & Lambert, 2013

124 Discussion: Question 9 Suppose that “cost disadvantage” were 2 cents per unit. What difference, if any, is there between that cost disadvantage and the transport cost barrier that we analyzed in Question 7 ? Discussion, Ques 7: Geographic Competition from Bertrandia Cents 1 2 3 4 5 6 7 8 9 10 12 14 16 18 20 At prices above 18.50 Bertrandia producers can sell into the Cournotia Market 10*.25 =2.5 Distance 1a - 76 © Goetz & Lambert, 2013

125 Discussion: Question 10 © Goetz & Lambert, 2013

126 Discussion: Question 11 © Goetz & Lambert, 2013

127 The Overview Cases in Chapter 1, Section B
Sec. 2 Sherman Act: Monopolization Aspen Skiing Co. v. Aspen Highlands Skiing Co. Graphics Products Distributors, Inc. v. Itek Corp. Vertical Restraints Sec. 1 Sherman Act Anticompetitive Agreements Rothery Storage and Van Co. v. Atlas Van Lines Horizontal Restraints Sec. 7 Clayton Act Anticompetitive Mergers United States . v. Waste Management, Inc. Mid-Michigan Radiology v. Central Michigan Community Hospital Sec. 4 Clayton Act Civil Treble Damage Suits Return © Goetz & Lambert, 2013

128 Aspen v. Aspen Highlands
Elements of Monopolization Offense Market Power Jury Instructions Right to Refuse to Cooperate with Competitor? Characterizations: Competitively Malign vs. Benign Practices Exhibit 5: Marketing Memorandum for Big Ski Attempted Monopolization Notes and Questions Epilogue Chapter TC 1. Monopolizing © Goetz & Lambert, 2013

129 Attempted Monopolization
In Lorain Journal, the violation of §2 was an “attempt to monopolize,” rather than monopolization, but the question of intent is relevant to both offenses. In the former case it is necessary to prove a “specific intent” to accomplish the forbidden objective––as Judge Hand explained, “an intent which goes beyond the mere intent to do the act.” United States v. Aluminum Co. of America, 148 F.2d 416, 432 (CA2 1945). In the latter case evidence of intent is merely relevant to the question whether the challenged conduct is fairly characterized as “exclusionary” or “anticompetitive”––to use the words in the trial court’s instructions––or “predatory,” to use a word that scholars seem to favor. © Goetz & Lambert, 2013

130 Elements of the Offense [p.15]
(1) The possession of monopoly power in a relevant market. (2) The wilful acquisition, maintenance, or use of that power by anticompetitive means or for anticompetitive or exclusionary purposes. “Bad Conduct” © Goetz & Lambert, 2013

131 Elements of the Offense [p.15]
(1) The possession of monopoly power in a relevant market. (2) The wilful acquisition, maintenance, or use of that power by anticompetitive means or for anticompetitive or exclusionary purposes. “Bad Conduct” © Goetz & Lambert, 2013

132 Did Ski Really Have Monopoly Power?
In what product market? Note that these bullets are hyperlinks. In what geographic market? © Goetz & Lambert, 2013

133 These products also in the relevant market?
Note that the animated list here appears automatically, without any interaction by you cross-country skiing ice-skating deer hunting swimming at tropical beaches touring Europe Club Med cruises Chapter TC

134 These products also in the relevant market?
Note that the animated list here appears automatically, without any interaction by you cross-country skiing ice-skating deer hunting swimming at tropical beaches touring Europe Club Med cruises Chapter TC

135 Assumptions and Premises Questions 8 and 9
8. The last question alerted you to the issues that may arise with respect to geographic market. As we shall see, similar questions will arise in the proper legal, and economic, delineation of product markets. Even for the Cournotia scenario, the definition of "product" is perhaps less simple than it first seems. What forms of "entry," or other competition with the mineral-water producers, might arise from the sales of things other than mineral water itself? [Hint: Might some people regard wine as a substitute for mineral water? If the mineral springs in question produce "naturally carbonated" mineral water, could uncarbonated water be converted into carbonated? Which possibilities involve demand substitutability? Supply substitutability?] 9. Suppose that we were to reintroduce the cost conditions of question (6) above --both the drilling and the per unit costs-- but apply these costs only to Bertrandia. The effect of this would be that Cournotia has a considerable cost advantage over Bertrandia in the production of mineral water. How does this cost differential affect the prognosis for successful anticompetitive price-increases in Cournotia? Remember This? © Goetz & Lambert, 2013

136 Are these places also in the relevant market?
other Western slopes other U.S. slopes foreign ski slopes © Goetz & Lambert, 2013

137 Are these places also in the relevant market?
other Western slopes other U.S. slopes foreign ski slopes © Goetz & Lambert, 2013

138 Other Western Slopes? © Goetz & Lambert, 2013

139 Other Western Slopes? © Goetz & Lambert, 2013

140 Other U.S. Slopes? © Goetz & Lambert, 2013

141 Foreign Slopes? © Goetz & Lambert, 2013

142 No Unqualified Right to Refuse to Deal With a Competitor
[last ¶ of p. 17, quoting Lorain Journal ] The publisher claims a right as a private business concern to select its customers and to refuse to accept advertisements from whomever it pleases. We do not dispute that general right. “But the word ‘right’ is one of the most deceptive of pitfalls; it is so easy to slip from a qualified meaning in the premise to an unqualified one in the conclusion. Most rights are qualified.” American Bank & Trust Co. v. Federal Bank, 256 U.S. 350, 358. The right claimed by the publisher is neither absolute nor exempt from regulation. Its exercise as a purposeful means of monopolizing interstate commerce is prohibited by the Sherman Act. Note the optional supplemental link on this button. Instructions Approved © Goetz & Lambert, 2013

143 These Jury Instructions Approved
[bottom of p. 15] . . . a company which possesses monopoly power and which refuses to enter into a joint operating agreement with a competitor or otherwise refuses to deal with a competitor in some manner does not violate §2 if valid business reasons exist for that refusal. In other words, if there were legitimate business reasons for the refusal, then the defendant, even if he is found to possess monopoly power in a relevant market, has not violated the law. We are concerned with conduct which unnecessarily excludes or handicaps competitors. This is conduct which does not benefit consumers by making a better product or service availableor in other waysand instead has the effect of impairing competition. © Goetz & Lambert, 2013

144 The “Characterization Problem” In Antitrust Litigation
[Click until you see the navigation buttons appear.] “Malign Scenario” = anticompetitive purpose, predatory “Benign Scenario” = procompetitive, “honestly industrial” Note the optional supplemental link on this button. Relevant Qs Malign Scenario © Goetz & Lambert, 2013

145 The Malign Scenario [p.19, bottom]
Perhaps most significant, however, is the evidence relating to Ski Co. itself, for Ski Co. did not persuade the jury that its conduct was justified by any normal business purpose. Ski Co. was apparently willing to forgo daily ticket sales both to skiers who sought to exchange the coupons contained in Highlands' Adventure Pack, and to those who would have purchased Ski Co. daily lift tickets from Highlands if Highlands had been permitted to purchase them in bulk. The jury may well have concluded that Ski Co. elected to forgo these short run benefits because it was more interested in reducing competition in the Aspen market over the long run by harming its smaller competitor. © Goetz & Lambert, 2013

146 No Plausible Benign Scenario?
[page 20, first full paragraph] That conclusion is strongly supported by Ski Co.'s failure to offer any [credible] efficiency justification whatever for its pattern of conduct. In defending the decision to terminate the jointly offered ticket, Ski Co. claimed that usage could not be properly monitored. The evidence, however, established that Ski Co. itself monitored the use of the 3-area passes based on a count taken by lift operators, and distributed the revenues among its mountains on that basis. Exh. 5 Memo © Goetz & Lambert, 2013

147 Exhibit 5: Marketing Analysis for Defendant Big Ski
Non-Cooperative Profits Cooperative Revenue Sources Big Little Big Little Slopes n (n-1) GC (n-1) NA NA NA NA NA Note: "GC" indicates aggregate gains from cooperative marketing of area- wide tickets. Little's Bargaining Position Revenue-Source Allocation: 26.25/105 = 25% Find "Break-even" Allocation for Little Ski: S x 105 = 22 S = 22/105 S = 20.9% (makes Little as well off as non-cooperative arrangement) Use Buttons to Zoom Case Q10 © Goetz & Lambert, 2013

148 (Enlargement 1, Exhibit 5 on p. 23)
Non-Cooperative Profits Cooperative Revenue Sources Big Little Big Little Slopes n (n-1) GC (n-1) NA NA NA NA NA Note: "GC" indicates aggregate gains from cooperative marketing of area-wide tickets. Note the optional supplemental link on this button. Q10 Case Go Back © Goetz & Lambert, 2013

149 (Enlargement 2, Exhibit 5)
Little's Bargaining Position Revenue-Source Allocation: 26.25/105 = 25% Find "Break-even" Allocation for Little Ski: S x 105 = 22 S = 22/105 S = 20.9% (makes Little as well off as non-cooperative arrangement) Q10 Case Go Back © Goetz & Lambert, 2013

150 Aspen Skiing Notes and Questions
Questions 1-3: Market Power Issues Questions 4-6: Characterization Issues Questions 8-9: Important Antitrust Terminology Questions 7, 10: Cooperation Issues Questions 11-13: Cooperation Cont’d.; Stevens note Case © Goetz & Lambert, 2013

151 Aspen Skiing “Market Power” Q1 thru Q3
1. What is the “market” over which Aspen was believed by the jury to have, or to be seeking, monopoly power? In the Mineral Springs hypothetical above, what would be the analogue of this alleged conduct? Remember: NQs that have an answering “Discussion” slide have an underlying hyperlink that will be signaled by the cursor turning to a hand when it passes over the question. Find and try a few of these. 2. What do you suppose the defense argued at the trial court level about the plausibility of Ski Co. being able to obtain monopoly power? Was the nature of the monopolized market an issue before the Supreme Court? 3. What economic “power” does the defendant in this case have over its rival? What is the origin of this power? One “benign” explanation is that the defendant simply exercised superior business acumen and foresight in buying up and developing ski resources within a burgeoning geographic market. (Evaluate the relative plausibility of alternative explanations.) To what extent should the defendant be entitled to “exploit” an advantage gained by superior market skill? © Goetz & Lambert, 2013

152 Aspen Skiing Characterization: Q4 thru Q6
4. Assess the credibility of the defense’s actual attempts at “benign” explanations of why ordinary business reasons caused it not to continue with the all-area ticket arrangement. 5. What about the “malign” explanation? Does the case provide any reason to believe that the defendant’s failure to cooperate with the plaintiff would have caused the plaintiff to be driven out of business? If not, how could the defendant have benefited from the conduct charged? Remember: NQs that have an answering “Discussion” slide have an underlying hyperlink that will be signaled by the cursor turning to a hand when it passes over the question. Find and try a few of these. 6. The behavior at issue in antitrust suits is commonly susceptible to alternative characterizations by the parties. In this casebook, we refer to opposing procompetitive and anticompetitive explanations of the conduct as the “benign” and “malign” scenarios, respectively. It is useful to begin developing a skill in recognizing the benign and malign versions of the facts. In many instances, one version or the other is very much more difficult for a jury––or even a judge––to understand and appreciate. [Question 7 is below on slide with Q10.] © Goetz & Lambert, 2013

153 Aspen Skiing Terminology: Q8-Q9
8. The Court labels Ski Company’s behavior “predatory,” using what turns out to be an important term in the antitrust lexicon. But what, exactly, does that term mean? Bear this question in mind as you read other cases where the same terminology is employed. Would you be terribly surprised if the meaning of such a key term never becomes completely clear? Remember: NQs that have an answering “Discussion” slide have an underlying hyperlink that will be signaled by the cursor turning to a hand when it passes over the question. Find and try a few of these. Remember: NQs that have an answering “Discussion” slide have an underlying hyperlink that will be signaled by the cursor turning to a hand when it passes over the question. Find and try a few of these. 9. Another key term introduced in this case is “exclusionary.” Clearly, not every practice that literally excludes is exclusionary in the antitrust law sense. Would it be exclusionary to drive out a rival by offering a better product? Or to produce the same product so cheaply that rivals cannot match one’s price? Surely not. What, then, is the correct sense of the word in the antitrust context? Does the court’s footnote make the sense sufficiently clear? [Question 7 is below on slide with Q10.] Character-ization © Goetz & Lambert, 2013

154 Aspen Skiing Cooperation: Q7 & Q10
7. What relevance, if any, is there to this being a refusal to continue a cooperative arrangement rather than a refusal to adopt a new one? (You may wish to assess the possible explanatory power of this factor as you read other cases.) The Court distinguishes between a new offer from a competitor to participate in a cooperative venture and a change in a cooperative arrangement that had persisted for years. Why, as a matter of economics and law, should that distinction matter? Do you think that Ski Company wished it had never entered into the arrangement with Highlands? Or was it worth it, despite the outcome here? What lessons about cooperative arrangements does this case suggest for business decision-makers? 10. Assume that the defendant was not seeking monopoly power, but that its actually proffered explanations of its conduct are nonetheless rather incredible. Can you think of any other reasonable explanation of why Ski Co. might have refused to continue an all-area ticket on terms that Highlands thought justified by past practice? Is your alternative rationale a “benign” one that could usefully have been argued at trial? [Hint: What were the gains from the cooperation and how was the distribution of those gains to be determined? Absent any cooperation, who suffered and by how much?] below is a suggestive “smoking gun” document found in the files of defendant Big Ski during an action brought by Little Ski under facts strikingly similar to the Aspen case. © Goetz & Lambert, 2013

155 Aspen Skiing Q11 thru Q13 11. Was there any antitrust risk involved in forms of cooperation between rivals such as Ski Co. and Highlands? [Hint: Consider the court’s footnote 9.] 12. What “rule” emerges from this case? Under what circumstances, if any, does a business have an affirmative duty to cooperate with one its competitors? 13. Justice Stevens, author of the Aspen Ski opinion, has written a disproportionate number of the Supreme Court’s opinions since being nominated by Pres. Ford. One of his chief supporters for the position was Edward Levi, Pres. Ford’s attorney-general and, previously, long-time dean and professor of antitrust law at the Univ. of Chicago. In the early 1950s, Stevens worked for the House Subcommittee on the Study of Monopoly Power and then on the Attorney General’s Natl. Committee to Study the Antitrust Laws. He taught antitrust law throughout the 1950s, first at Northwestern Univ. and then at the Univ. of Chicago. Appointed a federal judge in 1970, Stevens’ antitrust and Univ. of Chicago backgrounds were said to have much to do with Attorney-General Levi’s bringing him to Pres. Ford’s attention in 1975 for the Supreme Court. © Goetz & Lambert, 2013

156 Aspen Court’s Footnote 9 (p. 13)
9 In 1975, the Colorado Attorney General filed a complaint against Ski Co. and Highlands alleging, in part, that the negotiations over the 4-area ticket had provided them with a forum for price-fixing in violation of §1 of the Sherman Act and that they had attempted to monopolize the market for downhill skiing services in Aspen in violation of §2. In 1977, the case was settled by a consent decree that permitted the parties to continue to offer the 4-area ticket provided that they set their own ticket prices unilaterally before negotiating its terms. © Goetz & Lambert, 2013

157 Market Power Issue at Supreme Court
Defendants had lost in the trial court on this factual issue. Do you think that the jury was wrong in finding market power, or a threat of acquiring it? If so, was this due to poor lawyering for the defendants? If the jury was arguably wrong, why didn’t defendant appeal the market power finding? Return © Goetz & Lambert, 2013

158 Epilogue to Aspen Skiing
Epilogue to Aspen Skiing. Unsurprisingly, Highlands began marketing a 4-slope ticket after the litigation. Perhaps less obviously, Aspen Skiing continued to offer only a 3-slope ticket and, in essence, resolutely ignored the existence of Highlands. By the early 1990s, Highlands’ market share had dwindled to about 7% from its mid-1970s level of 17%. In 1992, Highlands’ owner, a Harvard alumnus, donated the resort to his alma mater which, in turn, sold the property to a Houston developer. Shortly thereafter, all of the Aspen-area slopes began to be operated jointly by the Aspen Skiing Co. Was this the equivalent of the Cournotian springs “merging to monopoly”? After learning more about merger law in Ch. 6, consider whether the merger could have been successfully opposed as a violation of §7 of the Clayton Act. Can you guess, even now? © Goetz & Lambert, 2013

159 © Goetz & Lambert, 2013

160 Note: Refusals to Deal [last paragraph of the note, p. 23] The next two cases also involve conduct characterizable as a refusal to deal. From the strictly legal perspective, there is a key difference in that the relationships involve a contract or agreement, thus bringing them within §1 of the Sherman Act rather than §2. It is frequently argued that concerted refusals to deal warrant greater scrutiny. See, e.g., Data General Corp. v. Grumman Systems Support Corp., 36 F.3d 1147, 1183 (1st Cir. 1994) (distinguishing unilateral and concerted refusals to deal without offering any rationale). Consider, however, whether the same economic effect could have been achieved via a unilateral declaration by the respective defendants, Itek and Atlas Van Lines. If so, should a defendant’s choice of a legal mechanism for effecting a result make a difference to antitrust liability? TC B. Overview TC 1. Monopolizing © Goetz & Lambert, 2013

161 Discussion: Aspen Skiing Q1
You can, of course, edit any Discussion slide and insert your own content. © Goetz & Lambert, 2013

162 Discussion: Aspen Skiing Q2
Market Power Issue at the Supreme Court © Goetz & Lambert, 2013

163 Discussion: Aspen Skiing Q3
© Goetz & Lambert, 2013

164 Discussion: Aspen Skiing Q4
© Goetz & Lambert, 2013

165 Discussion: Aspen Skiing Q5
© Goetz & Lambert, 2013

166 Discussion: Aspen Skiing Q6
© Goetz & Lambert, 2013

167 Discussion: Aspen Skiing, Note Question 7
Counseling Hypothesis: If a cooperative agreement with an actual or potential rival might have to be terminated sometime in the future, a business should think plenty hard about ever entering into the arrangement in the first place. Juries tend to see such terminations as (malign) attempts to stifle competition. © Goetz & Lambert, 2013

168 Discussion: Aspen Skiing, Note Question 7
Counseling Hypothesis: If a cooperative agreement with an actual or potential rival might have to be terminated sometime in the future, a business should think plenty hard about ever entering into the arrangement in the first place. Juries tend to see such terminations as (malign) attempts to stifle competition. © Goetz & Lambert, 2013

169 © Goetz & Lambert, 2013

170 Discussion: Aspen Skiing Q8
© Goetz & Lambert, 2013

171 Discussion: Aspen Skiing Q9
Footnote, p. 20 [32] “Thus, ‘exclusionary’ comprehends at the most behavior that not only (1) tends to impair the opportunities of rivals, but also (2) either does not further competition on the merits or does so in an unnecessarily restrictive way.” 3 P. Areeda & D. Turner, Antitrust Law 78 (1978). © Goetz & Lambert, 2013

172 Discussion: Aspen Skiing Q10
Hint: See Exhibit 5 © Goetz & Lambert, 2013

173 Discussion: Aspen Skiing Q11
© Goetz & Lambert, 2013

174 Discussion: Aspen Skiing Q12
Note: “Refusals to Deal” As Antitrust Violations © Goetz & Lambert, 2013

175 Note: “Refusals to Deal” As Antitrust Violations
Almost all exercises of economic power involve one party’s refusal to deal unless another party accepts certain terms. Hence, a refusal to deal can be a mechanism to achieve objectives that are clearly violations of the antitrust laws, including monopolization, price-fixing, etc. Unfortunately, conduct characterizable as a “refusal to deal” is also often a legitimate aspect of competitive bargaining. And, it is sometimes hard to tell the difference. An interesting aspect of Aspen Skiing is that a refusal to deal with a competitor becomes the central, liability-inducing element of defendant’s conduct. One reasonable interpretation of Aspen is that a defendant now bears an affirmative burden of proof to justify a refusal to deal with a competitor. But, is it clear what reasons would justify a refusal to deal? Would the type of “hard bargaining” hinted at in Exhibit 5 above suffice? And how onerous can the terms of willingness to deal be before they risk being interpreted as a constructive refusal? © Goetz & Lambert, 2013

176 Discussion: Aspen Skiing Q13
© Goetz & Lambert, 2013

177 Counseling Hypothesis:
If a cooperative agreement with an actual or potential rival might have to be terminated sometime in the future, a business should think plenty hard about ever entering into the arrangement in the first place. Juries tend to see such terminations as (malign) attempts to stifle competition. © Goetz & Lambert, 2013

178 Counseling Hypothesis:
If a cooperative agreement with an actual or potential rival might have to be terminated sometime in the future, a business should think plenty hard about ever entering into the arrangement in the first place. Juries tend to see such terminations as (malign) attempts to stifle competition. © Goetz & Lambert, 2013


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