Law Antitrust - Instructor: Dwight Drake National Society of Prof. Engineers v. U.S. (1978) Base Facts: National Association of Engineers precluded members from discussing or negotiating fees before securing client. Rationale was that fee considerations would compromise quality and safety, contrary to best interests of the public. What similarities with Chicago Board of Trade and Appalachian Coal? Could this rule be pro-competitive? Are price wars among professionals good for the public? Are they professional? What was issue for court?

Law Antitrust - Instructor: Dwight Drake National Society of Prof. Engineers v. U.S. (1978) Issue: Should rule of reason apply to permit Association’s rule? Decision: No. - Two Section 1 categories: Rule of Reason and Per Se. - Price is central nervous system of economy. Any agreement on price is per se violation of Section 1. Free flow of market forces important. - Rule of reason applies when restrain may promote competition. No such showing here. Fear of unreasonable competition not defense. Dissent: Rule of reason not so narrow. Professional associations different. Requiring ethical norms to promote competition before applying rule of reason is too tough a standard for professions.

Law Antitrust - Instructor: Dwight Drake Broadcast Music Inc. v. Columbia Broadcasting (1979) Base Facts: ASCAP and BMI secured nonexclusive licenses from composers and artists and then master licensed to users. CBS claimed master licenses controlled and fixed prices and were per se illegal. Ct of Appeals held per se illegal. What was underlying purpose of master license? What impact on market? Who gets hurt by this restraint? What was issue for court?

Law Antitrust - Instructor: Dwight Drake Broadcast Music Inc. v. Columbia Broadcasting (1979) Issue: Were master licenses per se illegal price fixing under Sherman 1. Decision: No. - To apply per se, must first inquire whether conduct interferes with free market System. - Blanket licenses not naked restrain, is nonexclusive, not interfere with competition, and is necessary to market the product. - Not illegal where agreement on price necessary to market product. Question: Is there per se exception or a preliminary inquiry before per se can be applied?

Law Antitrust - Instructor: Dwight Drake Catalano, Inc. v. Target Sales, Inc. (1980) Base Facts: Beer sellers agreed to eliminate all credit terms for distributors in market. Forced pre-pay or COD. District Ct held no per se violation. Ninth Cir. agreed, finding that all cash may promote competition by eliminating a barrier to entry (credit terms) What was purpose of eliminating credit terms? Did restrain limit competitors in any way? Who was hurt by this restrain? What if restrain standardized only a cost component, such as freight?

Law Antitrust - Instructor: Dwight Drake Catalano, Inc. v. Target Sales, Inc. (1980) Base Facts: Beer sellers agreed to eliminate all credit terms for distributors in market. Forced pre-pay or COD. District Ct held no per se violation. Ninth Cir. agreed, finding that all cash may promote competition by eliminating a barrier to entry (credit terms) Issue: Is agreement among horizontal competitors on credit terms per se illegal under Sherman 1? Decision: Yes. - Credit terms are part of price. Favorable credit is equivalent to discount. - Any agreement of price is per se illegal restraint under Sherman 1. - Notion that credit fixing may reduce barrier is inconsistent with cases. Such logic could be used to defend any restraint.

Law Antitrust - Instructor: Dwight Drake Arizona v. Maricopa County Medical Society (1982) Base Facts: Agreement among competing physicians to set the maximum fees that may be claimed for services rendered to patients covered by certain insurance plans. Services accounted for 70% of services in market. What if someone other than doctors set fees? Who was hurt by this arrangement? Are maximum price restraint different than minimum price restraint?

Law Antitrust - Instructor: Dwight Drake Arizona v. Maricopa County Medical Society (1982) Base Facts: Agreement among competing physicians to set the maximum fees that may be claimed for services rendered to patients covered by certain insurance plans. Agreement was through non-profit association of physicians. Services accounted for 70% of services in market. Ninth Cir. Held validity of agreement required evaluating its purpose and effect at trial. Issue: Was agreement per se violation of Sherman 1? Decision: Yes. - Per se violation because it fixes maximum prices. Pro-competitive justifications and purposes irrelevant. Agreement among horizontal competitors. - Per se rule promotes economic prediction, judicial convenience and business certainty.

Law Antitrust - Instructor: Dwight Drake Arizona v. Maricopa County Medical Society (1982) Dissent: Powell, Burger, Rehnquist - New method of providing insurance at max. rates for public benefit. - Consumer benefits given “short shrift” by majority. - Before per se applied, court should determine whether restrain is naked restrain with no purpose except stifling competition.

Law Antitrust - Instructor: Dwight Drake NCAA v. University of Oklahoma (1984) Base Facts: NCAA prevented member schools from having more than 6 TV games (4 National TV) every two years through contracts with television networks. Purpose of rule is to promote live audience attendance. U. of Oklahoma and Georgia challenged limits. What was purpose of rule? Who was hurt by the rule? Should presence of regulatory association make a difference? How does this compare with Chicago Trade and Appalacian Coal?

Law Antitrust - Instructor: Dwight Drake NCAA v. University of Oklahoma (1984) Base Facts: NCAA prevented member schools from having more than 6 TV games (4 National TV) every two years through contracts with television networks. Purpose of rule is to promote live audience attendance. U. of Oklahoma and Georgia challenged limits. Issue: Does NCAA rule violate Sherman I? Decision: Yes - Classic cartel to limit output and raise prices. - Per Se not applicable because no product without horizontal agreement. - Must look to justifications of rule, which aren’t sufficient. - Goal to protect live audience just example of limiting output to raise price. - Relevant market is college football, not all entertainment. Market power here. - Many NCAA rules valid: not need for this market restrain. Dissent: (White, Rehnquist): Restrain justified to preserve competition, academic interests. NCAA not monopoly.

Law Antitrust - Instructor: Dwight Drake FTC v. Superior Ct. Trial Lawyers Assoc. (1990) Base Facts: Boycott by D.C. trial lawyers who demanded higher fees before taking court appointed assignments. Rates were raised and FTC sued for violation of FTC act. Appellate Ct. remanded on grounds that it was “expressive boycott” and FTC should have inquired into market power and First Amendment freedoms. What is “expressive” boycott? Did lawyers have market power? What if select individual lawyers refused assignments until fees raised? When are there too many?

Law Antitrust - Instructor: Dwight Drake FTC v. Superior Ct. Trial Lawyers Assoc. (1990) Base Facts: Boycott by D.C. trial lawyers who demanded higher fees before taking court appointed assignments. Rates were raised and FTC sued for violation of FTC act. Appellate Ct. remanded on grounds that it was “expressive boycott” and FTC should have inquired into market power and First Amendment freedoms. First Issue: Was per se rule applicable to boycott? Decision: Yes - Boycott was price-fixing cartel, illegal per se. - Social utility and political wisdom irrelevant. - Per se rule for administrative convenience (no need for market power showing), but also reflect long-standing judgment that prohibited acts do injure competition.