Download presentation
Presentation is loading. Please wait.
1
The University of Chicago
11/15/2018 Class 3 Antitrust, Winter, Market Power Intro, Characterizing Horizontal Agreements Randal C. Picker James Parker Hall Distinguished Service Professor of Law The Law School The University of Chicago Copyright © Randal C. Picker. All Rights Reserved.
2
Lorain Journal (US, 1951) Key Facts
11/15/2018 Lorain Journal (US, 1951) Key Facts 1932: Lorain Journal buys Times-Herald, only daily newspaper competition Sunday-News left as chief print competition : Local monopoly in distribution of news and ads 1948: Radio station WEOL starts November 15, 2018
3
Lorain Journal (US, 1951) Key Facts
11/15/2018 Lorain Journal (US, 1951) Key Facts Journal starts exclusivity policy: us or them District court enjoined program November 15, 2018
4
Two Questions What is the Right Definition of the Market?
11/15/2018 Two Questions What is the Right Definition of the Market? Did We See an Output Restriction? November 15, 2018
5
Position of Lorain Journal
November 15, 2018 Casebook Draft
6
Other Newspapers November 15, 2018 Casebook Draft
7
WEOL Radio Station November 15, 2018 Casebook Draft
8
WEOL Radio Station November 15, 2018 Casebook Draft
9
Understanding the Market
11/15/2018 Understanding the Market Newspapers Lorain Journal: Mon to Sat: 13,000 copies Sunday News: Sun only: 3000 copies Cleveland Plain Dealer, News and Press: Mon to Sat: 6000 copies in Lorain Cleveland Sunday Plain Dealer: 11,000 copies in Lorain Radio: WEOL November 15, 2018
10
11/15/2018 Analysis Limits on unilateral right to refuse to deal, but not if purpose is to maintain or create monopoly Business justifications for conduct? Alternatives Volume Discounts? November 15, 2018
11
Jury Instructions Refused
“In particular the court refused the request to charge the following: ‘The essence of the law is injury to the public. It is not every restraint of competition and not every restraint of trade that works an injury to the public; it is only an undue and unreasonable restraint of trade that has such an effect and is deemed to be unlawful.’” November 15, 2018 Trenton Potteries (US 1927)
12
Jury Instruction Given
“This disposition of the matter ignored the fact that the trial judge plainly and variously charged the jury that the combinations alleged in the indictment, if found, were violations of the statute as a matter of law, saying:” November 15, 2018 Trenton Potteries (US 1927)
13
Jury Instruction Given
“ ‘. . . the law is clear that an agreement on the part of the members of a combination controlling a substantial part of an industry, upon the prices which the members are to charge for their commodity, is in itself an undue and unreasonable restraint of trade and commerce; . . .’” November 15, 2018 Trenton Potteries (US 1927)
14
Sup Ct Holding “The charge of the trial court, viewed as a whole, fairly submitted to the jury the question whether a price-fixing agreement as described in the first court was entered into by the respondents.” November 15, 2018 Trenton Potteries (US 1927)
15
Sup Ct Holding “Whether the prices actually agreed upon were reasonable or unreasonable was immaterial in the circumstances charged in the indictment and necessarily found by the verdict. The requested charge which we have quoted, and others of similar tenor, while true as abstract propositions, were inapplicable to the case in hand and rightly refused.” November 15, 2018 Trenton Potteries (US 1927)
16
Modes of Analysis Per Se: Categories of Illegal Conduct
11/15/2018 Modes of Analysis Per Se: Categories of Illegal Conduct Rule of Reason: Categories of Examined Conduct November 15, 2018
17
Per Se Illegality “Under the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se.” November 15, 2018 Socony-Vacuum Oil (US 1940)
18
Per Se Illegality “Where the machinery for price-fixing is an agreement on the prices to be charged or paid for the commodity in the interstate or foreign channels of trade, the power to fix prices exists if the combination has control of a substantial part of the commerce in that commodity.” November 15, 2018 Socony-Vacuum Oil (US 1940)
19
Rule of Reason Framework
“Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.” November 15, 2018 Chicago Board of Trade (US 1918)
20
Rule of Reason Framework
“To determine that question the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable.” November 15, 2018 Chicago Board of Trade (US 1918)
21
Rule of Reason Framework
“The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts.” November 15, 2018 Chicago Board of Trade (US 1918)
22
Modes of Analysis Per Se: Categories of Illegal Conduct
11/15/2018 Modes of Analysis Per Se: Categories of Illegal Conduct Shrinking year-by-year Price Fixing Market Division Tying (but only sort of) November 15, 2018
23
Modes of Analysis Rule of Reason: Categories of Examined Conduct
11/15/2018 Modes of Analysis Rule of Reason: Categories of Examined Conduct Most everything else November 15, 2018
24
U.S. v. ASCAP NYT, Sept 1, 1934
25
U.S. v. ASCAP Chi Trib, Feb 6, 1941
26
U.S. v. ASCAP Chi Trib, Feb 6, 1941
27
U.S. v. ASCAP Chi Trib, Feb 6, 1941
28
U.S. v. ASCAP NYT, Feb 18, 1941
29
106. Exclusive rights in copyrighted works
11/15/2018 106. Exclusive rights in copyrighted works Subject to sections 107 through 121, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; November 15, 2018
30
11/15/2018 106 (Cont.) (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; November 15, 2018
31
Broadcast Music (BMI) (1979)
11/15/2018 Broadcast Music (BMI) (1979) Collective Rights Organizations The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. are collective rights organizations. They bundle together copyrighted materials and license them to users. November 15, 2018
32
Broadcast Music (BMI) (1979)
11/15/2018 Broadcast Music (BMI) (1979) Licenses ASCAP: BMI: November 15, 2018
33
Price Setting or Price Fixing?
11/15/2018 Price Setting or Price Fixing? Hypo Treasure Island is a grocery store at 55th and Lake Park TI buys lots of products from many companies (Kellogg, General Mills and others) and sells them for various prices Section 1 violation? Is this different from BMI? November 15, 2018
34
Selling the Public Performance Right I
11/15/2018 Selling the Public Performance Right I Hypo Company approaches composers one-by-one and seeks nonexclusive right to license nondramatic public performances One-by-one sales Each song offered for exactly the same price Section 1 Violation? BMI? November 15, 2018
35
11/15/2018 Answer Does anything in the case create “a contract … in restraint of trade?” Suppose contract between ASCAP and composer says something like “You C authorize us A to authorize users of your music. You C continue to have the right to also authorize music users, and you C can authorize other rights vendors to be able to authorize as well.” November 15, 2018
36
Selling the Public Performance Right II
11/15/2018 Selling the Public Performance Right II Hypo All the composers get together and agree that they will sell the right to engage in nondramatic public performances; only way rights will be sold One-by-one sales Each song offered for exactly the same price Section 1 Violation? BMI? November 15, 2018
37
11/15/2018 Answer Horizontal price-fixing cartel November 15, 2018
38
Understanding BMI Hypo: Collective Policing
11/15/2018 Understanding BMI Hypo: Collective Policing Each composer kicks in $100 to create song policing service Copyright police listen to radio and report violations to composers Does this violate SA 1? Is this Broadcast Music? November 15, 2018
39
Answer As framed joint venture
11/15/2018 Answer As framed joint venture Highly unlikely to give rise to antitrust violation What should we make of the idea that they could have policed separately and competed in policing but instead they have chosen to proceed collectively? November 15, 2018
40
11/15/2018 Answer Says the Court “It takes an organization of rather large size to monitor most or all uses and to deal with users on behalf of the composers. Moreover, it is inefficient to have too many such organizations duplicating each other’s monitoring of use.” November 15, 2018
41
Understanding BMI Hypo
11/15/2018 Understanding BMI Hypo Each composer separately authorizes E, on a nonexclusive basis, to charge whatever it wants to for a song and to bundle it in whatever fashion E wants, but the composer also requires E to pay the composer a particular price per use of a song Does this violate SA 1? Is this Broadcast Music? November 15, 2018
42
Answer Again, no restraint of trade? Do ASCAP and BMI violate Sec. 2?
11/15/2018 Answer Again, no restraint of trade? Do ASCAP and BMI violate Sec. 2? Even if no “restraint in trade” do they monopolize? November 15, 2018
43
ASCAP License Structure
11/15/2018 ASCAP License Structure Emerged from prior antitrust litigation The Blanket License The key feature is that the license fee is tied to the radio station’s gross revenue. This means that the license fee is independent of actual use of ASCAP songs. November 15, 2018
44
ASCAP License Structure
11/15/2018 ASCAP License Structure The Per Program License Revenue-based license but tied through formula to actual use of songs. Licensee can sue to have federal court set “reasonable fee” November 15, 2018
45
What Does CBS Want? Why? Per the Opinion
“CBS would prefer that ASCAP be authorized, indeed directed, to make all its compositions available at standard per-use rates within negotiated categories of use. But if this in itself or in conjunction with blanket licensing constitutes illegal price fixing by copyright owners,” November 15, 2018
46
What Does CBS Want? Why? Per the Opinion
“CBS urges that an injunction issue forbidding ASCAP to issue any blanket license or to negotiate any fee except on behalf of an individual member for the use of his own copyrighted work or works.” November 15, 2018
Similar presentations
© 2025 SlidePlayer.com Inc.
All rights reserved.