Principles of antitrust law

I. INTRODUCTION AND BACKGROUND. A. Scope of the Outline. 1. This outline discusses the legal principles applied in interpreting and understanding Sections 1 and 2 of the Sherman Act, Section 7 of the Clayton Act, antitrust exemptions, private antitrust damage actions, and the antitrust enforcers. 2. Important antitrust subjects it does not discuss include international antitrust, antitrust and intellectual property, and the RobinsonPatman Act. B. Purpose of the Antitrust Laws. 1. To protect and promote competition as the primary method by which this country allocates scarce resources to maximize the welfare of consumers. a. “Antitrust law is the study of competition. It is a body of law that seeks to assure competitive markets through the interaction of sellers and buyers in the dynamic process of exchange. . . . The promotion of competition through restraints on monopoly and cartel behavior clearly emerges as the first principle of antitrust.”1 b. “Competition is our fundamental national economic policy, offering as it does the only alternative to the cartelization or governmental regimentation of large portions of the economy.”2 c. The antitrust laws “rest on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while . . . providing an environment conducive to the preservation of our democratic political and social institutions. But even were that premise open to question, the policy unequivocally laid down by the antitrust laws is competition.”3

Scope of the Outline

This article explores the legal principles governing the interpretation of Sections 1 and 2 of the Sherman Act, as well as Section 7 of the Clayton Act It also examines antitrust exemptions, private antitrust damage actions, and the role of antitrust enforcers in maintaining market competition.

2 Important antitrust subjects it does not discuss include international antitrust, antitrust and intellectual property, and the Robinson-Patman Act.

Purpose of the Antitrust Laws

Antitrust law serves as the foundation for promoting competition, which is essential for the effective allocation of scarce resources and maximizing consumer welfare It ensures competitive markets through the dynamic interactions between buyers and sellers, emphasizing the importance of restraining monopolistic and cartel behaviors As the cornerstone of our national economic policy, competition stands as the only viable alternative to the cartelization or government control of significant economic sectors The underlying belief of antitrust laws is that unrestrained competitive forces lead to optimal resource allocation, lower prices, higher quality goods and services, and substantial material progress, all while fostering an environment that supports our democratic institutions Ultimately, the policy firmly establishes competition as a fundamental principle.

1 E Thomas Sullivan & Jeffrey L Harrison, Understanding Antitrust and its Economic Implications 1, 4-5 (6 th ed

2 United States v Philadelphia Nat’l Bank, 374 U.S 321, 372 (1963)

3 N Pac Ry Co v United States, 356 U.S 1, 4 (1958); see also Cal v Safeway, Inc., 615 F.3d 1171, 1174 (9th Cir

The antitrust regime established by Congress aims to protect the public by promoting free competition among customers, which enhances efficiency, increases output, lowers prices, and improves the quality of products and services This principle underscores the importance of maintaining competitive markets to benefit consumers.

Antitrust laws serve as the "Magna Carta of free enterprise" and a "charter of freedom," establishing competition as the guiding principle for business practices Enacted through the Sherman Act, these laws are essential safeguards for the nation's free market structure, ensuring fair competition and protecting the integrity of the marketplace.

2 But what is “competition?” a See 11 Herbert Hovenkamp, Antitrust Law ả 1901 at 202-03 (2d ed 2005):

For many non-economists and legal professionals, the term "competition" typically signifies rivalry, which is most clearly illustrated by the number of participants in a market and their absence of collaboration.

In economic terms, "competition" refers to a market condition where prices align with marginal costs, and all firms operate as price takers, meaning they cannot set higher prices at their discretion.

According to economists, market output serves as a key indicator of competition levels within a market As market output rises, it signifies an increase in competition, highlighting the relationship between output and competitive dynamics.

—with output measured by the number of units sold or in some cases the quality of the units

A production joint venture among three firms in a ten-firm market can be viewed as reducing competition by eliminating rivalry among those firms However, from an economic perspective, this collaboration actually enhances competition by lowering costs and increasing total market output.

5 United States v Socony-Vacuum Oil Co., 310 U.S 150, 221 (1940)

6 City of Lafayette v La Power & Light Co., 435 U.S 389, 406 (1978)

7 N.C State Bd of Dental Examiners v FTC, _ U.S _, _, 135 S.Ct 1101, 1109 (2015)

[But how to measure output?] The relevant output consists of not merely the naked product itself, but all information, amenities, and other features that a firm produces

The Supreme Court has underscored that antitrust laws serve as a "consumer welfare prescription," aimed at ensuring low prices, increased output, high-quality products, production and distribution efficiency, innovation, and greater consumer choice.

Antitrust philosophies have evolved over time, primarily contrasting the populist view, which asserts that "big is bad," with the Chicago school’s economic perspective that prioritizes allocative and productive efficiencies From the 1940s to the mid-1970s, the populist approach dominated antitrust enforcement However, since the mid-1970s, the Chicago school’s principles have taken precedence Currently, there are signs that the pendulum may be swinging back towards a more populist stance, particularly with the Obama administration's commitment to "reinvigorate" antitrust enforcement.

Antitrust laws are designed to protect competition rather than individual competitors This fundamental principle indicates that if a challenged action does not negatively impact overall market competition and, consequently, consumers, it does not constitute an antitrust issue, even if it eliminates a specific competitor Ultimately, consumers prioritize the availability of sufficient sellers to ensure competitive pricing and quality, rather than the number of competitors in the market.

8 Reiter v Sonotone Corp., 422 U.S 330, 343 (1979) (emphasis added); see also Broadcom Corp v Qualcom, Inc.,

501 F.3d 297, 308 (3d Cir 2007) (“The primary goal of antitrust law is to maximize consumer welfare by promoting competition among firms.”)

9 Cal v Safeway, Inc., 651 F.3d 1118, 1132 (9 th Cir 2011) (“The touchstone [of the antitrust laws] is consumer good.”)

In examining the various philosophies surrounding antitrust, Robert Lande's article, "The Rise and (Coming) Fall of Efficiency as the Rule of Antitrust," published in the Antitrust Bulletin, presents a liberal perspective that contrasts with other schools of thought This discussion highlights the evolution of antitrust principles and emphasizes the ongoing debate over the role of efficiency in antitrust enforcement.

Bork, The Antitrust Paradox: A Policy at War with Itself, 90-106 (1978) (conservative view)

11 Brunswick Corp v Pueblo Bowl-O-Mat, Inc., 429 U.S 477, 488 (1977) (emphasis in original; internal quotation marks omitted)

12 E.g., Sterling Merch., Inc v Nestle, S.A., 656 F.3d 112, 122 (1 st Cir 2011) (“It is axiomatic that antitrust laws are concerned with protecting against impairments to a market’s competitiveness and not impairments to any one market actor.”)

13 Prods Liability Ins Agency v Crum & Foster Ins Cos., 682 F.2d 660, 664 (7 th Cir 1982); see also Marucci

Sports, L.L.C v NCAA, 751 F.3d 368, 377 (5 th Cir 2014) (“A restraint should not be deemed unlawful, even if it

4 b The antitrust laws do not prohibit unfair competition, aggressive competition, hostility toward competitors, or unethical conduct unless it rises to the point of substantially adversely affecting market-wide competition 14

6 The purpose of the antitrust laws is not to protect small business 15

In antitrust analyses, the primary objective is to evaluate the impact of specific conduct on competition by comparing its anticompetitive and procompetitive effects A violation of antitrust laws occurs only when the anticompetitive effects, such as higher prices, decreased output, and lower quality, outweigh the procompetitive benefits.

Antitrust laws safeguard consumers by preventing sellers and buyers from acquiring or maintaining market power through harmful practices Instead, market power should be achieved through methods that benefit consumers, such as offering higher quality products, lower prices, or improving the efficiency of goods and services production and distribution, thereby promoting "competition on the merits."

9 Antitrust is not just a “big firm”-type practice of law limited to representing Fortune

Knowledge of antitrust laws is essential for businesses, whether they operate on Wall Street or Main Street These laws play a crucial role in maintaining competitive markets by preventing practices that eliminate competitors It is important to ensure that enough competition remains to uphold fair prices, quality, and service for consumers.

The antitrust laws, as highlighted in Brooke Group, Ltd v Brown & Williamson Tobacco Corp., 509 U.S 209, 225 (1993), do not establish a federal standard for unfair competition or provide remedies for all torts.

Types of Antitrust Problems

In antitrust analysis, it is essential to recognize that the core issue often revolves around collusion or exclusion Collusion involves coordinated actions or agreements among multiple entities, such as price-fixing among competitors, directly impacting their customers In contrast, exclusionary conduct occurs when a single entity or a group works to exclude competitors from the market, significantly hindering their ability to compete While the immediate targets of such actions are competing firms, the broader negative effect ultimately falls on consumers who face reduced competition.

Role of Economics

Antitrust law is deeply intertwined with microeconomic and industrial organization theories, making a foundational understanding of economics essential for serious study in this field This interdisciplinary collaboration between law and economics has shaped antitrust policy and practice, positioning it as a unique intersection of legal and economic principles Today, decision-makers in competition policy heavily depend on economic concepts, terminology, and evidence, with terms such as elasticity of demand, marginal cost, and oligopoly behavior becoming integral to the discourse of antitrust.

2 Professional economist experts are necessary for almost every antitrust case and frequently even in antitrust counseling

3 Complicated econometric analysis is playing a larger and larger role in antitrust analysis and litigation 20

18 Herbert Hovenkamp, Federal Antitrust Policy v (Preface) (5th ed 2016)

19 Jonathan B Baker & Timothy F Bresnahan, “Economic Evidence in Antitrust: Defining Markets and Measuring Market Power,” in Handbook of Antitrust Economics 1 (P Buccirossi ed 2008)

A fundamental grasp of econometric principles is now crucial for antitrust practitioners, as highlighted by the ABA Section of Antitrust Law (2005) In legal cases such as Animal Science Prods., Inc v China Nat’l Metals & Mineral Imp & Exp Corp., regression analysis is utilized to estimate the relationship between product prices and market forces, including demand and supply variables.

What Makes Practicing Antitrust Difficult?

1 Antitrust law integrates legal and economic principles

2 Antitrust law is dynamic, not static

3 Antitrust analysis tends to be predictive and speculative—not certain

4 Antitrust’s determinative variables are often difficult, if not impossible, to measure empirically and balance

5 Antitrust analysis is usually very fact-specific

6 Every antitrust principle has nuances, corollaries, exceptions, and exceptions to the exceptions

7 Because little in antitrust is black or white, experience, judgment, and business-risk assessment are crucial

8 As in other areas of law, clients always want to know how they can attain their business objectives, not why they can’t.

Motions Practice is Extremely Important

Antitrust cases rarely reach trial due to several factors, including the high stakes involved, often referred to as "bet the company" cases, which can deter companies from pursuing litigation The imposition of mandatory treble damages and plaintiff's attorneys' fees adds financial pressure, making settlements more appealing Additionally, these cases are time-consuming, diverting valuable employee resources, and the unpredictability of lay juries can lead to uncertain outcomes Overall, the notorious costs associated with antitrust litigation further discourage companies from taking their cases to trial.

The 2007 FTC case involving Evanston Northwestern Healthcare Corporation serves as a prime example of how regression analysis can be effectively utilized in antitrust litigation This analysis provided compelling evidence demonstrating that the merger of the hospitals led to significant anticompetitive price increases, highlighting the crucial role of statistical methods in assessing the impact of corporate consolidations on market competition.

21 Robert F Booth Trust v Crowley, 687 F.3d 314, 317 (7 th Cir 2012)

2 Thus, the vast majority of antitrust cases are dismissed pursuant to Rules 12(b)(6) or

The Antitrust Statutes—A Brief Overview

1 The good news—very few statutes

The Sherman Act, designed as a charter of freedom, is characterized by its broad and ambiguous language, allowing for adaptability akin to constitutional provisions This lack of detailed definitions prevents potential harm to legitimate businesses and avoids creating loopholes Since its inception, the Court has approached the Sherman Act as a common-law statute, evolving its prohibitions on trade restraints to align with contemporary economic realities and experiences.

3 The antitrust statutes: a Section 1 of the Sherman Act 24 —Prohibits agreements that unreasonably restrain competition; enacted in 1890

(a) Individuals—Incarceration not exceeding 10 years, and fines not exceeding $1 million per violation

(b) Corporations—Fines not exceeding $100 million per violation

(3) Civil: Mandatory treble damages and attorneys’ fees for successful plaintiffs b Section 2 of the Sherman Act 25 —Prohibits (1) monopolization, (2) attempted monopolization, and (3) conspiracies to monopolize

22 Appalachian Coals, Inc v United States, 288 U.S 344, 360 (1933)

23 Leegin Creative Leather Prods., Inc v PSKS, Inc., 551 U.S 877, 899 (2007)

The Clayton Act addresses various aspects of competition law, including Section 3, which prohibits certain tying and exclusive-dealing agreements, and Section 7, which forbids mergers that may significantly reduce competition; both are civil statutes The Robinson-Patman Act targets price discrimination practices that could harm competition, offering civil remedies and a rarely enforced criminal provision Additionally, Section 5(a) of the Federal Trade Commission Act prohibits "unfair methods of competition," focusing solely on civil enforcement and overlapping with existing antitrust laws, though it is not classified strictly as an antitrust statute.

Section 5 expands the scope of antitrust regulations by not only prohibiting conduct similar to other antitrust laws but also addressing incipient restraints on competition Additionally, it targets behaviors that the Federal Trade Commission identifies as violating the underlying principles of antitrust laws.

(2) Enforced only by the Federal Trade Commission (“FTC”); no private right of action

(3) Civil injunctive relief only g The various state antitrust laws

(1) Civil and criminal sanctions, depending on the state

(2) Every state except Pennsylvania has state antitrust laws

30 FTC v Sperry & Hutchinson Co., 405 U.S 233 (1972); Realcomp II, Ltd v FTC, 635 F.3d 815, 824 (2d Cir

The FTC Act's prohibition of unfair competition overlaps with Section 1 of the Sherman Act, leading to reliance on Sherman Act jurisprudence to assess violations of Section 5 of the FTC Act, as noted in Cal Dental Ass’n v FTC Additionally, the scope of Section 5 has been extensively discussed in Rambus, Inc., highlighting its significance in antitrust enforcement.

(3) Enforced primarily by state attorneys general

(4) Usually are similar or almost identical to the federal antitrust laws, and courts rely on federal antitrust decisions for guidance and interpretation.

The Enforcers

Interstate Commerce

Antitrust laws were established under Congress's authority to regulate interstate commerce, necessitating that any challenged conduct or parties have some impact on this commerce Courts require evidence of this effect to establish subject-matter jurisdiction; without it, they cannot proceed with cases As Congress's regulatory power has broadened, so too has the reach of antitrust laws.

Commerce Clause has expanded through the years a The plaintiff must allege and prove either that defendants’ conduct was in interstate commerce or substantially affected interstate commerce 33

31 For extended discussions of state antitrust laws, see ABA Section of Antitrust Law, State Antitrust Enforcement

Handbook (2d ed 2008); 1-3 ABA Section of Antitrust Law, State Antitrust Practice & Statutes (5 th ed 2014)

32 Section 4C of the Clayton Act, 15 U.S.C § 4c See generally La v Allstate Ins Co., 536 F.3d 418 (5th Cir

33 E.g., Hosp Bldg Co v Trustees of Rex Hosp., 425 U.S 738 (1976); Gulf Coast Hotel-Motel Ass’n v Miss Gulf

Coast Golf Course Ass’n, 658 F.3d 500 (5 th Cir 2011)

The standard for demonstrating the interstate commerce element in antitrust cases is notably lenient, leading to very few dismissals based on lack of impact on interstate commerce However, it is essential to include some allegations regarding a defendant's interstate dealings.

Market Power

Market power is a crucial concept in antitrust policy, which focuses on preventing firms from acquiring, maintaining, or using market power unless it is achieved through fair competition Seller market power refers to the ability of a seller or a group of sellers to profitably increase prices above competitive levels—typically by 5 to 10%—for an extended period by reducing output This price increase is deemed profitable when the additional revenue from higher prices surpasses the loss in sales Conversely, if the price hike leads to a significant drop in sales that renders it unprofitable, the firm is considered to lack market power.

Market power refers to the capacity of a firm or group of firms to set prices higher than what would prevail in a competitive market This ability allows them to maintain elevated prices profitably over an extended period, distinguishing their market influence from that of competitors.

34 See generally Summit Health v Pinhas, 500 U.S 322 (1991); see also N Tex Specialty Physicians v FTC, 528 F.3d 346 (5th Cir 2008)

35 Villare v Beebe Med Ctr., 630 F Supp 2d 418, 425 (D Del 2009) (bold in original); see also Poling v K

Hovnanian Enters., Inc., 32 Fed App’x 32 (3d Cir 2002) (Table) (opinion reprinted at 2002-1 Trade Cas (CCH) ả

In the case of 73,683, the complaint was dismissed due to the involvement of a single real estate transaction that lacked a significant impact on interstate commerce Similarly, in Wahi v Charleston Area Medical Center, the court dismissed the case because the complaint failed to reference interstate commerce altogether.

36 ABA Section of Antitrust Law, Market Power Handbook ix (2d ed 2012)

37 For excellent explanations and discussions, see William M Landes & Richard A Posner, Market Power in

Market power is defined as a firm's ability to increase prices above competitive levels without suffering a rapid loss of sales that would render the price hike unprofitable This concept is critical in antitrust analysis, as it helps assess the competitive dynamics within a market Understanding demand elasticities plays a vital role in evaluating market power and its implications for competition.

38 Race Tires Am., Inc v Hoosier Racing Tire Corp., 614 F.3d 57, 74 (3d Cir 2010); see also In re Se Milk

Antitrust Litig., 739 F.3d 262, 277 (6 th Cir 2014) (“Market power is defined as the ability to charge a supracompetitive price—a price above a firm’s marginal cost.”)

39 ABA Section of Antitrust Law, Market Power Handbook, supra, at 1-2 (emphasis in original); see also In re

Sulfuric Acid Antitrust Litig., 703 F.3d 1004, 1007 (7 th Cir 2012) (noting that market power is “the power to raise

Market price is determined by the interplay of supply and demand for a product or service To exert market power and raise prices, a seller or a collective of sellers must reduce supply or output, assuming other factors remain constant.

Market power leads to a misallocation of resources, resulting in an output level that is less than optimal This inefficiency means that resources are not utilized in areas where they hold the greatest value for consumers, a situation referred to as “allocative efficiency.” Consequently, the lower level of output compared to a competitive market ultimately leaves society at a disadvantage.

Seller market power can lead to an unfair transfer of wealth from buyers to sellers, with some labeling the unlawful exercise of this power to raise prices as "white-collar theft." Conversely, buyer market power, or monopsony power, allows buyers or groups of buyers to significantly lower the prices they pay for goods or services below competitive levels by reducing their purchase quantities over an extended period.

Monopsony power leads to a misallocation of resources, causing insufficient input purchases and, consequently, suboptimal output production This inefficiency results in resources being diverted away from uses that consumers value the most.

Monopsony power unfairly shifts wealth from sellers to buyers, while monopoly power is defined as a significant degree of market power, often used interchangeably with market power by economists Most firms possess some level of market power, as their products or services are differentiated in the eyes of consumers, allowing them to set prices above marginal costs A firm maintains market power unless its offerings are perfect substitutes for those of competitors Antitrust laws do not address trivial degrees of market power, focusing instead on more substantial impacts on competition.

40 See generally Roger D Blair & Jeffrey L Harrison, Monopsony in Law and Economics (2010); Campfield v State

In a monopsony, buyers possess significant market power, enabling them to reduce demand for a product and subsequently lower prices, as established in Farm Mut Auto Ins Co., 532 F.3d 1111, 1118 (5th Cir 2008) This reduction in demand allows a monopsonist to compel suppliers to sell at prices lower than those that would exist in a competitive market, as noted by Herbert Hovenkamp in his analysis of federal antitrust policy.

41 Landes & Posner, supra, 81 Harv L Rev at 937

42 See generally Market Power Handbook, supra, at 3-5

2 In general, a firm’s (or group of firms’) degree of market power depends on: a First, the firm’s market share, after defining the relevant market 43

(1) No magic market share, by itself, proves market power, because other factors affect the degree of a firm’s market power Many courts, however, suggest that 30% is a minimum threshold requirement 44

A firm's market share represents the portion of the relevant market that it dominates, calculated by dividing the firm's sales by the total sales of both the firm and its competitors This metric can be assessed in various ways, including the percentage of sales revenue, the percentage of physical units sold, or the percentage of production capacity utilized.

Hospital inpatient market shares can be assessed through various metrics, including revenues, admissions, patient days, discharges, licensed beds, and staffed beds The degree of market power is influenced by the price elasticity of demand, which reflects how sensitive sales are to price changes For instance, if a 1% price increase leads to a 5% decrease in sales, the product is considered price elastic, indicating that the firm may not have significant market power due to the potential loss of business from price hikes Furthermore, even firms with a dominant market share can lack market power if the price elasticity of demand is high Additionally, the response of competitors in increasing their output in reaction to a price increase is another factor to consider.

The degree of market power is influenced by the price elasticity of supply, which measures the responsiveness of output to price changes When entry barriers for new firms and expansion barriers for existing firms are considered, a seller's price increase may not be profitable if it triggers new market entrants or encourages incumbents to expand their output If the increase in output from these new entrants or incumbents matches or surpasses the seller's reduction in output needed to raise prices, the seller effectively loses market power.

3 Thus, the larger the number of alternative suppliers available to buyers (both incumbent firms and those that would become suppliers in response to a seller’s price increase),

43 For a helpful explanation why, see Hovenkamp, Federal Antitrust Policy, supra, § 3.1b at 109-10

44 E.g., Jefferson Parish Hosp Dist No 2 v Hyde, 466 U.S 2 (1984); Stop & Shop Supermarket Co v Blue Cross

& Blue Shield, 373 F.3d 57, 68 (1st Cir 2004) (suggesting a 40% share is necessary)

45 FTC v OSF Healthcare Sys., 852 F Supp.2d 1069 (N.D Ill 2012) (calculating inpatient shares based on both patient days and patient admissions)

The elasticity of demand and supply for a seller's product directly impacts the seller's market power; greater elasticity diminishes this power A buyer can only exert monopsony power when sellers have few or no alternative purchasing options If a buyer tries to leverage this power by reducing the price paid, it can restrict the volume of purchases, further limiting sellers' options.

Market power is not determined by a specific market share; rather, it is influenced by various factors, including the availability of interchangeable products, entry barriers that deter new competitors, and expansion barriers that limit existing firms' output Key considerations include demand elasticity, which reflects consumers' ability to switch suppliers in response to price increases, and supply elasticity, which indicates whether other suppliers can ramp up production to restore competitive pricing.

Relevant Market

To accurately compute market shares, it is essential to first define the relevant market impacted by the challenged conduct This involves identifying the specific products or services and the geographic area affected by the alleged violation, as these factors collectively establish the "relevant market" for assessing the influence of the challenged conduct on competition.

2 The “relevant market consists of a “relevant product market” and a “relevant geographic market.”

3 The relevant market must usually be defined before market power, and thus the conduct’s effect on competition, can be assessed 50

4 The purpose for defining the relevant market is to identify significant competitors of the firm in question—i.e., firms that can constrain its ability to exercise market power 51

When addressing antitrust concerns related to seller market power, it is crucial to identify the relevant market, which encompasses alternative supply sources available to customers These alternatives play a vital role in limiting the seller's ability to raise prices profitably, as the presence of competing firms can effectively curb potential price increases.

In cases involving buyer market power, also known as monopsony power, the relevant market encompasses alternative buyers that sellers can turn to if the buyer in question attempts to leverage its monopsony power by lowering the prices it pays through restricted purchases.

49 For very helpful discussions, see ABA Section of Antitrust Law, Market Definition in Antitrust Cases (2012); Jonathan B Baker, Market Definition: An Analytical Overview, 74 Antitrust L.J 129 (2007)

Defining the market is essential for analyzing market power, as highlighted in McWane, Inc v FTC, 783 F.3d 814, 828 (11th Cir 2015) Additionally, the importance of a well-defined relevant market is underscored in Se Mo Hosp v C.R Bard, Inc., 642 F.3d 608, 613 (8th Cir 2011), where it states that without this definition, courts cannot assess the impact of potentially illegal actions on competition.

Evaluating market power necessitates the definition of the relevant market, as established in Geneva Pharms., supra, 386 F.3d at 496 This definition is crucial for assessing whether a firm possesses market power, as highlighted in SMS Sys Main Servs., Inc v Digital Equip Corp., 188 F.3d 11, 16 (1st Cir 1999).

Defining the relevant market aims to identify the market participants and competitive pressures that limit a firm's ability to increase prices or reduce output, as highlighted in Geneva Pharms., 386 F.3d at 496.

Determining the boundaries of a relevant market involves identifying consumer choices available to them, as highlighted in Se Mo Hosp., 642 F.3d at 613 Similarly, in Doctor’s Hosp v Se Med Alliance, 123 F.3d 301, 311, it is emphasized that defining a market requires recognizing the producers that offer alternative sources for the products or services provided by a defendant firm.

53 See, e.g., Todd v Exxon Corp., 275 F.3d 191, 202 (2d Cir 2001) (Sotomayor, J.) (explaining that “in such a case,

The market dynamics are characterized by competing buyers rather than competing sellers, where buyers are perceived by sellers as reasonably good substitutes for one another This shift in perspective highlights the importance of buyer behavior in shaping market conditions.

The "hypothetical monopolist" methodology, utilized by the FTC, Antitrust Division, and increasingly by courts, defines a relevant market as a specific product or group of products within a geographic area This approach posits that a hypothetical monopolist, as the sole producer or seller, would likely enforce a small but significant and nontransitory price increase, while keeping the terms of sale for other products unchanged Commonly known as the "small but significant and non-transitory price increase" (SSNIP) methodology, it serves as a key framework in antitrust analysis.

In defining a relevant market, it is essential to identify firms that can limit the market power of a company by preventing price increases This involves recognizing alternative sellers that consumers can turn to in order to avoid inflated prices, as well as all sellers capable of significantly impacting each other's business levels By pinpointing these firms, we can effectively delineate the relevant market.

To effectively define the relevant product market, it is essential to identify the outer boundaries, which encompass all firms that offer products viewed as substitutes by consumers Additionally, the relevant geographic market must also be clearly delineated to understand the competitive landscape within a specific region.

“reasonably interchangeable” products or services with significant price cross-elasticity of demand among them—i.e., good substitutes in the eyes of consumers 57

In the relevant product market, products do not have to be identical but should be interchangeable enough that a potential price increase in one product would prompt a significant number of customers to switch to an alternative product.

54 See U.S Dep’t of Justice & Federal Trade Comm’n, Horizontal Merger Guidelines § 4.11 (2010) (“Merger

Guidelines”); ProMedica Health Sys., 2012 WL 1155392 (FTC Mar 18, 2012), petition for review denied, 749 F.3d

55 See generally Gregory J Werden, The 1982 Merger Guidelines and the Ascent of the Hypothetical Monopolist

56 Theme Promotions, Inc v News Am Mktg Fsi, 539 F.3d 1046, 1053 (9th Cir 2008)

The definition of a product market is shaped by the reasonable interchangeability of use and the cross elasticity of demand among products and their substitutes, as established in Brown Shoe Co v United States Additionally, the relevant product market encompasses the choices available to consumers, highlighting the importance of consumer perception of interchangeability, as seen in Eastman Kodak Co v Image Technical Services, Inc These principles underline the factors that determine market boundaries in legal contexts.

In determining the relevant product market, courts emphasize the importance of cross-elasticity of demand, recognizing that consumers perceive certain products as reasonable substitutes A product market must encompass all commodities that consumers consider interchangeable for similar purposes Additionally, a court's assessment of the boundaries of a relevant product market necessitates an examination of the choices available to consumers.

58 Malaney v UAL Corp., 434 Fed App’x 620 (9th Cir 2011) (per curiam mem opinion)

Price cross-elasticity of demand, often known as demand substitutability, quantifies how the quantity demanded of one product responds to price changes in another product, reflecting the extent to which these two products can substitute for each other.

Market Concentration

Market concentration refers to the number of firms operating within a specific market and their respective market shares A market exhibits higher concentration when there are fewer firms and a significant disparity in their market shares.

Market concentration poses significant issues as it correlates directly with market power and pricing, making it a crucial factor in antitrust analysis According to fundamental economic principles, higher levels of market concentration can lead to increased market power, which often results in elevated prices for consumers Understanding this relationship is essential for evaluating competitive practices and enforcing antitrust regulations effectively.

In highly concentrated markets, firms are more inclined to engage in explicit collusion or function as an oligopoly, leading to interdependent pricing decisions rather than independent ones This phenomenon, known as "tacit collusion," allows these companies collectively to exert greater control over pricing strategies.

71 Herbert Hovenkamp, Federal Antitrust Policy § 1.6 at 48 (5th ed 2016)

Market concentration occurs when a small number of firms dominate sales within a particular market, indicating a high level of concentration This phenomenon is highlighted in the work of Pindyck and Rubinfeld, which defines market concentration in economic terms Understanding market dynamics is crucial for analyzing competition and regulatory implications.

The significance of market structure lies not only in the total number of firms but also in the presence of major players that hold substantial market share For instance, if two dominant firms control 90% of sales in a market while 20 smaller firms share the remaining 10%, these large firms may possess considerable monopoly power.

21 market power without entering any actual agreement that might violate the antitrust laws 74 The greater the level of market concentration, the easier formal or informal collusion among firms becomes 75

The Herfindahl-Hirschman Index (HHI) is the preferred method for measuring market concentration To calculate the HHI, first determine the market share of each firm within the relevant market Next, square each market share and then sum these squares The resulting HHI value ranges from nearly zero, indicating a highly competitive market with many firms, to 10,000, which signifies a monopoly with a single firm dominating the market.

(1) Assume, for example, a relevant market with five firms with the following shares: A %, B%, C5%, D%, and E % The HHI would be

The Herfindahl-Hirschman Index (HHI) is calculated by summing the squares of the market shares of all firms in a market, reflecting both the number of firms and their relative sizes An increase in HHI indicates a decrease in the number of firms or a greater disparity in market shares among them, signaling higher market concentration.

An HHI level of 2,350 indicates a "moderately concentrated" market according to the U.S Department of Justice and FTC Horizontal Merger Guidelines, which classify markets as unconcentrated (HHI below 1,500), moderately concentrated (HHI between 1,500 and 2,500), and highly concentrated (HHI above 2,500) Additionally, the four-firm concentration ratio (CR4) assesses the combined market share of the four largest firms, categorizing a market as unconcentrated if CR4 is below 50%, moderately concentrated if between 50% and 70%, and highly concentrated if above 70%.

Efficiencies

PRIVATE ACTIONS FOR DAMAGES UNDER THE ANTITRUST LAWS

A Background—The overwhelming percentage of antitrust cases are brought by private plaintiffs injured by alleged antitrust violations, not by the government

B Text of the Statute—Section 4(a) of the Clayton Act 82 authorizes private parties to recover triple damages for antitrust violations by providing that “any [1] person who shall be [2] injured in his [3] business or property [4] by reason of [5] anything forbidden in the antitrust laws may sue therefore and shall recover [6] three-fold the damages by him sustained, and

[7] the cost of suit, including [8] a reasonable attorney’s fee.” (Emphasis added.)

1 Although Section 4(a) seems simple and all-encompassing such that anyone injured by a violation can recover damages, courts have significantly limited its scope and the circumstances in which plaintiffs can recover damages

2 As the Supreme Court has explained, “Congress did not intend the antitrust laws to provide a remedy in damages for all injuries that might be traced to an antitrust violation.” 83

C Treble Damages and Attorney’s Fees—Treble damages, costs, and attorneys fees for successful plaintiffs are mandatory in federal antitrust suits 84

D Liability versus Recovery of Damages—Don’t confuse issues relating to liability under the antitrust laws with issues relating to relief (e.g., recovery of damages under Section 4 of the Clayton Act)

E Elements of a Section 4 Claim for Damages

1 Person a The Sherman Act 85 defines “persons” as including corporations and associations b The Supreme Court has held that states and municipalities are also “persons” for purposes of Section 4(a), and thus may recover treble damages 86

83 Associated Gen Contractors v Cal State Council of Carpenters, 459 U.S 519, 534 (1983)

84 Gulfstream III Assocs., Inc v Gulfstream Aerospace Corp., 955 F.2d 425 (3d Cir 1995); Va Panel Corp v Mac

Panel Co., 1996-2 Trade Cas (CCH) ả 71,483 (W.D Va 1996), rev’d in part and modified on other grounds, 133

86 Ga v Pa R.R Co., 324 U.S 439 (1945) (states); Chattanooga Foundry & Pipe Works v City of Atlanta, 203 U.S 390 (1906) (municipalities)

In the case of United States v Cooper Corp., the Supreme Court determined that the federal government does not qualify as a "person" under Section 4(a) of the Clayton Act In response to this ruling, Congress introduced Section 4A, which allows the federal government to seek treble damages, although it does not cover attorneys' fees Additionally, in Pfizer v Government of India, the Supreme Court addressed the status of foreign governments in similar legal contexts.

“persons” for purposes of Section 4(a) As a result, Congress enacted Section 4(b) of the

The Clayton Act, particularly Section 4C enacted in 1976, restricts recovery to single damages in most cases while empowering state attorneys general to file parens patriae lawsuits in federal court This provision allows them to seek damages collectively for citizens harmed by antitrust violations.

2 Injury a Injury merely requires that the plaintiff experience some loss

A firm not involved in a price-fixing conspiracy among its competitors typically experiences no harm; in fact, it may benefit from the cartel's actions The supracompetitive prices established by the conspirators can enable the firm to raise its own prices or boost sales, effectively operating under the "umbrella" of the cartel's price increase.

(2) Likewise, if the defendants’ conduct is unsuccessful in achieving anticompetitive effects, typically no plaintiff is injured even if defendants’ conduct is unlawful 93

3 Business or property—Section 4(a) provides that a plaintiff’s injury must be to its

“business or property.” The Supreme Court has held that the phrase includes anything of

92 E.g., JTC Petrol Co v Piasa Motor Fuels, Inc., 190 F.3d 775 (7th Cir 1999); see also Matsushita Elec Indus

Co v Zenith Radio Corp., 475 U.S 574 (1986); Arista Records LLC v Lime Group, LLC, 532 F Supp 2d 556

93 E.g., Davric Maine Corp v Rancourt, 216 F.3d 143 (1st Cir 2000)

25 material value 94 but that it does not include personal or emotional injuries 95

4 Causation a The injury for which plaintiff seeks damages must have been caused by the antitrust violation There must be some direct causal connection between the antitrust violation and plaintiff’s injury—causation is the bridge between the two A plaintiff cannot recover where the defendant’s conduct was unlawful and plaintiff was injured, but its injury resulted from a cause other than the unlawful conduct 96 b The antitrust violation, however, need only be a “material” cause of plaintiff’s injury, not the sole cause 97

(1) To be a “material” cause, the violation must have been a “substantial contributing factor” to plaintiff’s injury 98

(2) Some courts apply a “but for” standard—that absent the violation, plaintiff would not have been injured 99

94 Reiter v Sonotone Corp., 442 U.S 330 (1979) It includes things such as money and employment Int’l Bhd of

Teamsters, Local 734 Health & Welfare Fund v Philip Morris, Inc., 196 F.3d 818 (7th Cir 1999)

The case 95 Tal v Hogan, 453 F.3d 1244, 1254 (10th Cir 2006) clarifies that the term "business or property" specifically excludes personal injuries, derivative injuries like loss in stock value or employment opportunities, as well as injuries to reputation, dignity, and emotional damages.

96 E.g., Heary Bros Lightning Protection Co v Lightning Protection Inst., 262 Fed App’x 815 (9th Cir 2008); In re Canadian Imp Antitrust Litig., 470 F.3d 785 (8th Cir 2006)

In the case of In re Publication Paper Antitrust Litigation, the court clarified that an antitrust defendant's unlawful actions do not have to be the sole cause of a plaintiff's injuries To establish a causal connection, the plaintiff must demonstrate that the defendant's conduct was a significant or materially contributing factor to the injury This principle was further supported in the case of J.B.D.L Corp v Wyeth, highlighting the importance of substantial contribution in antitrust claims.

In the case of Ayerst Labs., Inc., 485 F.3d 880, 887 (6th Cir 2007), the court emphasized that the plaintiff is responsible for demonstrating that the violation significantly contributed to their injury, acting as a substantial factor in the resulting damages It was clarified that the defendant's actions do not have to be the only proximate cause of the alleged injuries.

In legal contexts, a "material cause" is defined as a "substantially contributing factor," as established in cases like Read v Med X-Ray Ctr and Irvin Indus., Inc v Goodyear Aerospace Corp These rulings emphasize that for a violation to be significant, it must serve as a "substantial or materially contributing factor" in the circumstances being evaluated.

To succeed in an antitrust claim, a plaintiff must demonstrate that the injuries claimed would not have occurred without the defendants' antitrust violation, which emphasizes the importance of the materiality requirement in the causation analysis This principle is supported by various legal precedents, including SAS v Puerto Rico Tel Co and Stamatakis Indus v King, highlighting the critical role of causation in antitrust litigation.

Inc., 425 F Supp 2d 484 (S.D.N.Y 2006); Twin Cities Bakery Workers Health & Welfare Fund v Biovail Corp.,

(3) Many courts hold that plaintiff must prove causation with a “fair degree of certainty.” 100

5 Antitrust injury a Antitrust injury is one of the most important, and sometimes most confusing, concepts in antitrust law It is a key essential element in every antitrust action for damages 101 and for injunctive relief 102 b Antitrust injury is “injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.” 103 c The type of injury the antitrust laws were intended to prevent and the characteristic

Defendants' actions are deemed unlawful due to their anticompetitive effects, which must directly result in the plaintiff's injury This injury arises from a reduction in competition linked to the challenged conduct, rather than from unrelated causes Consequently, while certain behaviors may breach antitrust laws and harm the plaintiff, they may not necessarily lead to what is defined as "antitrust injury."

Antitrust injury occurs only when there is a violation of antitrust laws, making the inquiry into antitrust injury irrelevant if no violation exists Furthermore, for a violation to qualify as an antitrust injury, it must inflict harm on competition in the market as a whole, rather than solely affecting individual competitors.

(2) Therefore, to constitute antitrust injury, “[t]he injury should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the

100 E.g., J.B.D.L Corp., supra.; Taylor Publ’g Co v Josten’s, Inc., 216 F.3d 465 (5th Cir 2000)

101 Brunswick Corp v Pueblo Bowl-O-Mat, Inc., 429 U.S 477 (1977) (the seminal decision)

102 Cargill Corp v Montfort of Colo., 479 U.S 104 (1986)

Text of the Statute

trade or commerce among the several States is illegal.” 169

B Essential Elements—Section 1 prohibits every (1) agreement or conspiracy that (2) unreasonably restrains competition, 170 and these are the essential elements of the violation

Section 1 is essential because it highlights the tendency of individuals within the same industry to gather not just for enjoyment, but often to engage in discussions that can lead to conspiracies against the public or schemes to inflate prices This underscores the importance of monitoring such interactions to ensure fair market practices and protect consumer interests.

To violate Section 1, the conduct in question must stem from an agreement or concerted action, as unilateral or independent actions by a single entity do not constitute a violation The terms “contract,” “combination,” “conspiracy,” “agreement,” “understanding,” and “concerted action” are interchangeable in the context of Section 1.

167 E.g., Coastal Fuels, Inc v Caribbean Petrol Corp., 990 F.2d 25 (1st Cir 1993)

168 E.g., Theme Promotions, Inc v News Am Mktg Fsi, 539 F.3d 1046 (9th Cir 2008); Samuel v Herrick Mem’l

169 Section 1 of the Sherman Act, 15 U.S.C § 1

170 See generally SD3, LLC v Black & Decker (U.S.), Inc., 801 F.3d 412 (4 th Cir 2015) (elements are (1) a contract, combination, or conspiracy (2) that imposed an unreasonable restraint of trade); Abraham & Veneklasen Joint

Venture v Am Quarter Horse Ass’n, 776 F.3d 321 (5 th Cir 2015) (essential elements are (1) a conspiracy that (2) produced anticompetitive effects (3) in the relevant market); Robertson v Sea Pines Real Estate Cos., 679 F.3d 278,

284 (4 th Cir 2012) (“To establish a § 1 violation, a plaintiff must prove, and therefore plead, ‘(1) a contract, combination, or conspiracy; (2) that imposed an unreasonable restraint of trade.”); William O Gilley Enters v Atl

Richfield Co., 588 F.3d 659 (9th Cir 2009); Total Benefits Planning Agency, Inc v Blue Cross & Blue Shield, 552

F.3d 430 (6th Cir 2008); Benson v St Joseph’s Reg’l Health Ctr., 575 F.3d 542 (5 th Cir 2008)

171 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776)

172 See, e.g., Am Needle, Inc v NFL, 560 U.S 183 (2010); Bell Atl Corp v Twombly, 550 U.S 544

(2007); Fisher v City of Berkeley, 475 U.S 260 (1986); In re Chocolate Confectionary Antitrust Litig., 801 F.3d

Section 1 of the Sherman Act is designed to address specific restraints of trade, emphasizing that liability cannot arise solely from a defendant's unilateral actions, regardless of any anticompetitive intent Notably, it only applies to restraints that are the result of a contract, combination, or conspiracy, as established in various court rulings, including Evergreen Partnering Group, Inc v PactIV Corp and Agnew v NCAA.

Antitrust issues typically arise from two types of agreements: horizontal, which occur among competitors, and vertical, which take place between firms at different stages of production or distribution Competitors are defined as firms that operate in the same relevant market and can significantly impact each other's sales It is important to note that horizontal agreements are generally more sensitive to antitrust scrutiny compared to vertical agreements.

Agreements can significantly impact both interbrand competition, which involves competition among different brands of the same product, and intrabrand competition, which pertains to competition among sellers of the same brand Antitrust laws are particularly concerned with agreements that influence interbrand competition, as they are more sensitive in nature compared to those affecting intrabrand competition Even if intrabrand competition is limited, strong interbrand competition can still exist, making the scrutiny of horizontal agreements that affect interbrand competition a primary focus of antitrust regulations.

To uphold the agreement requirement outlined in Section 1, it is essential that (1) the alleged conspirators possess the legal capacity to conspire, and (2) the disputed actions must stem from a collective agreement or conspiracy rather than from independent actions This concept is often referred to as the "capacity to conspire" or "intraenterprise conspiracy."

In the landmark case Copperweld Corp v Independence Tube Corp., the Supreme Court established the "single-entity defense," ruling that a parent company and its wholly-owned subsidiary cannot conspire under antitrust laws due to their shared economic interests and lack of divergent goals This means they are considered a single entity for antitrust purposes, regardless of their separate corporate structures, and their internal agreements do not fulfill Section 1's requirement for a conspiracy The Court emphasized that the nature of the relationship between the entities, rather than their formal structure, is crucial in this determination While the ruling specifically addressed parent-subsidiary relationships, lower courts have since broadened its application to various affiliated entities.

(1) Parents and their wholly-owned subsidiaries are single entities 177

In the case of In re Musical Instruments & Equip Antitrust Litig., the Supreme Court clarified the distinction between vertical agreements, which occur between different levels of the supply chain, such as manufacturers and retailers, and horizontal agreements, which take place among competitors This differentiation is crucial in antitrust litigation, as it influences how agreements are evaluated under competition law.

797 F.3d 1057 (D.C Cir 2015) (noting difference between horizontal and vertical agreements); In re Se Milk

In antitrust law, horizontal agreements occur between competitors operating at the same level in the market structure, while vertical restraints involve agreements between parties at different levels, such as manufacturers and distributors (Antitrust Litig., 739 F.3d 262, 272 (6th Cir 2014); Anderson, L.L.C v Am Media, Inc., 680 F.3d 162 (2d Cir 2012)).

In the case of Campfield v State Farm Mutual Automobile Insurance Company, the Tenth Circuit Court highlighted that antitrust concerns are most significant when actual competitors form agreements Conversely, vertical arrangements typically do not raise the same level of concern and can often lead to pro-competitive outcomes.

176 See also Am Needle, Inc v NFL, supra, 560 U.S at 195 (quoting Copperweld: ‘“substance, not form, should determine whether a[n] entity is capable of conspiring under § 1’”)

177 Copperweld, supra; Capital Imaging Assocs., P.C v Mohawk Valley Med Assocs., Inc., 996 F.2d 537 (2d Cir

(2) Parents and their second-tier subsidiaries (i.e., companies wholly owned by a parent’s wholly-owned subsidiary) are single entities 178

There is significant confusion surrounding the classification of parents and their less-than-wholly-owned subsidiaries as single entities, with inconsistent court decisions on the matter Some courts employ a fact-based analysis that examines the level of control one entity has over another and whether their economic interests are aligned or divergent While certain rulings necessitate nearly 100% ownership by the parent for single-entity designation, others accept a majority ownership as sufficient.

Majority ownership establishes a centralized control that constitutes a single entity for antitrust considerations, regardless of whether this control is actively exercised on a daily basis.

(b) It is control—more than mere ownership—that is the decisive factor And as a factual matter, an entity need not necessarily own 50% of another entity to effectively control it

(4) Merged firms—Once completely merged, the merging firms are a single entity for antitrust analysis, and their actions are unilateral, not concerted

(5) Corporations and their stockholders, directors, officers, and employees—Usually, corporations and their employees, officers, directors, and stockholders are incapable of conspiring either among themselves or with the corporation 182

178 Advanced Health-Care Servs., Inc v Radford Cmty Hosp., 910 F.2d 139 (4th Cir 1990); Shaw v Rolex Watch,

179 See, e.g., Livingston Downs Racing Ass’n v Jefferson Downs, 257 F Supp 2d 819, 835 (M.D La 2002)

(explaining that “there can be no § 1 conspiracy between one corporation and another corporation that it legally controls”) (emphasis added); Direct Media Corp v Camden Tel & Tel Co., 989 F Supp 1211 (S.D Ga 1997)

In legal contexts, a 51% ownership is often deemed sufficient for establishing single-entity status, as demonstrated in the case of Aspen Title & Escrow Co v Jen-Wen, Inc., where the court ruled that the Copperweld doctrine applies exclusively to wholly owned subsidiaries or those with minimal ownership below 100% Furthermore, the ruling in Square D Co v Schneider, S.A clarified that a parent company and a less-than-wholly-owned subsidiary can indeed engage in conspiratorial actions These precedents highlight the complexities of corporate ownership and antitrust implications in subsidiary relationships.

1986-2 Trade Cas (CCH) ả 67,412 (N.D Ga 1986) (51% control sufficient for single-entity status)

180 Coast Cities Truck Sales, Inc v Navistar Int’l Transp., 912 F Supp 747 (D.N.J 1995)

181 7 Phillip Areeda & Herbert Hovenkamp, Antitrust Law ả 1467a at 239 (3d ed 2010)

182 See, e.g., Copperweld, supra; Freeman v San Diego Ass’n of Realtors, 322 F.3d 1133 (9 th Cir 2003); Patel v

Scotland Mem’l Hosp., 91 F.3d 132 (4th Cir 1996) (per curiam unpublished opinion reprinted at 1996-2 Trade Cas

Under the doctrine of intraenterprise immunity, courts typically determine that a company cannot conspire with its officers and employees due to the shared economic interests between them This principle has been upheld in various cases, such as Nurse Midwifery Assocs v Hibbett and Solla v Aetna Health Plans, which reinforce the idea that the unity of purpose within a company limits the potential for conspiracy claims involving its personnel.

Some courts recognize the "independent personal stake" exception, allowing employees with a personal economic interest in a conspiracy to be viewed separately from their employer, making their agreement subject to Section 1 For instance, if two employees agree on terms that benefit their personal interests rather than the corporation's, this agreement may also fall under Section 1 However, certain circuits, like the Sixth Circuit, explicitly reject this independent personal stake exception.

Elements of a Section 4 Claim for Damages

Person

The Sherman Act defines "persons" to encompass corporations and associations, and the Supreme Court has determined that states and municipalities also qualify as "persons" under Section 4(a), allowing them to seek treble damages.

83 Associated Gen Contractors v Cal State Council of Carpenters, 459 U.S 519, 534 (1983)

84 Gulfstream III Assocs., Inc v Gulfstream Aerospace Corp., 955 F.2d 425 (3d Cir 1995); Va Panel Corp v Mac

Panel Co., 1996-2 Trade Cas (CCH) ả 71,483 (W.D Va 1996), rev’d in part and modified on other grounds, 133

86 Ga v Pa R.R Co., 324 U.S 439 (1945) (states); Chattanooga Foundry & Pipe Works v City of Atlanta, 203 U.S 390 (1906) (municipalities)

In the case of United States v Cooper Corp., the Supreme Court determined that the federal government does not qualify as a "person" under Section 4(a) of the Clayton Act In response to this ruling, Congress introduced Section 4A, which specifically allows the federal government to seek treble damages, although it does not permit the recovery of attorneys' fees Additionally, in Pfizer v Government of India, the Supreme Court addressed the status of foreign governments in legal contexts.

“persons” for purposes of Section 4(a) As a result, Congress enacted Section 4(b) of the

The Clayton Act, established in 90, primarily restricts recovery to single damages in most cases In 1976, Section 4C was added, enabling state attorneys general to file parens patriae lawsuits in federal court, representing the collective interests of citizens harmed by antitrust violations.

Injury

a Injury merely requires that the plaintiff experience some loss

A firm that is not involved in a price-fixing conspiracy among its competitors typically does not suffer any harm and may even benefit from it The supracompetitive prices established by the cartel can enable the firm to raise its own prices or boost sales, effectively operating under the “umbrella” of the conspirators’ price increase.

(2) Likewise, if the defendants’ conduct is unsuccessful in achieving anticompetitive effects, typically no plaintiff is injured even if defendants’ conduct is unlawful 93

Business or property

“business or property.” The Supreme Court has held that the phrase includes anything of

92 E.g., JTC Petrol Co v Piasa Motor Fuels, Inc., 190 F.3d 775 (7th Cir 1999); see also Matsushita Elec Indus

Co v Zenith Radio Corp., 475 U.S 574 (1986); Arista Records LLC v Lime Group, LLC, 532 F Supp 2d 556

93 E.g., Davric Maine Corp v Rancourt, 216 F.3d 143 (1st Cir 2000)

25 material value 94 but that it does not include personal or emotional injuries 95

Causation

To successfully claim damages for an antitrust violation, the plaintiff must demonstrate a direct causal link between the violation and their injury, establishing causation as the critical connection It is essential to note that the injury must not stem from factors unrelated to the unlawful conduct of the defendant Importantly, the antitrust violation only needs to be a "material" cause of the plaintiff's injury, rather than the sole cause.

(1) To be a “material” cause, the violation must have been a “substantial contributing factor” to plaintiff’s injury 98

(2) Some courts apply a “but for” standard—that absent the violation, plaintiff would not have been injured 99

94 Reiter v Sonotone Corp., 442 U.S 330 (1979) It includes things such as money and employment Int’l Bhd of

Teamsters, Local 734 Health & Welfare Fund v Philip Morris, Inc., 196 F.3d 818 (7th Cir 1999)

In the case of 95 Tal v Hogan, the 10th Circuit Court clarified that the term "business or property" does not encompass personal injuries, derivative injuries like stock value loss or job opportunities, as well as damages to reputation, dignity, and emotional distress.

96 E.g., Heary Bros Lightning Protection Co v Lightning Protection Inst., 262 Fed App’x 815 (9th Cir 2008); In re Canadian Imp Antitrust Litig., 470 F.3d 785 (8th Cir 2006)

In antitrust litigation, it is not necessary for a defendant's unlawful conduct to be the sole cause of a plaintiff's injuries To establish a causal connection, the plaintiff must demonstrate that the defendant's actions were a substantial or materially contributing factor to the injury suffered This principle was highlighted in the case of In re Publication Paper Antitrust Litig., where the court emphasized the importance of showing a significant link between the defendant's conduct and the alleged harm.

In the case of Ayerst Labs., Inc., 485 F.3d 880, 887 (6th Cir 2007), it was established that the plaintiff must demonstrate that the violation significantly contributed to their injury, serving as a substantial factor in the resulting damages or acting as the proximate cause of the harm Importantly, it was noted that the defendant's actions do not have to be the only proximate cause of the alleged injuries.

In legal contexts, a material cause is defined as a "substantially contributing factor," as established in the case of Read v Med X-Ray Ctr., 110 F.3d 543, 545 (8th Cir 1997) Similarly, Irvin Indus., Inc v Goodyear Aerospace Corp., 974 F.2d 241, 245 (2d Cir 1992) clarifies that for a violation to be significant, it must serve as a "substantial or materially contributing factor."

To succeed in an antitrust claim, a plaintiff must demonstrate that the injuries they allege would not have occurred without the defendants' antitrust violation, highlighting the necessity of materiality in the causation analysis This principle is supported by various cases, including SAS v Puerto Rico Tel Co and Stamatakis Indus v King, which reinforce the importance of establishing a direct link between the alleged violation and the resulting harm.

Inc., 425 F Supp 2d 484 (S.D.N.Y 2006); Twin Cities Bakery Workers Health & Welfare Fund v Biovail Corp.,

(3) Many courts hold that plaintiff must prove causation with a “fair degree of certainty.” 100

Antitrust injury

Antitrust injury is a crucial concept in antitrust law, serving as a fundamental element in actions for damages and injunctive relief It refers to the specific type of harm that antitrust laws aim to prevent, stemming from the unlawful actions of defendants Understanding antitrust injury is essential for navigating legal claims within this framework.

Defendants' actions are deemed unlawful due to their anticompetitive effects, which must directly lead to the plaintiff's injury It is essential that the harm experienced by the plaintiff arises specifically from the reduction in competition caused by the challenged conduct, rather than from unrelated factors Consequently, while certain conduct may breach antitrust laws and inflict injury on the plaintiff, it does not necessarily result in what is legally recognized as "antitrust injury."

Antitrust injury occurs only when there is a violation of antitrust laws, as the inquiry into antitrust injury becomes irrelevant without such a violation Furthermore, for an action to constitute a violation of these laws and result in antitrust injury, it must cause harm to competition on a market-wide scale, rather than solely affecting individual competitors.

(2) Therefore, to constitute antitrust injury, “[t]he injury should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the

100 E.g., J.B.D.L Corp., supra.; Taylor Publ’g Co v Josten’s, Inc., 216 F.3d 465 (5th Cir 2000)

101 Brunswick Corp v Pueblo Bowl-O-Mat, Inc., 429 U.S 477 (1977) (the seminal decision)

102 Cargill Corp v Montfort of Colo., 479 U.S 104 (1986)

In the case of Ky Speedway, LLC v Nat’l Ass’n of Stock Car Auto Racing, the court emphasized that for an injury to be considered an antitrust injury, it must be linked to a specific anti-competitive element of the practice being examined.

Antitrust laws are designed to protect competition rather than individual competitors, as established in 105 Brunswick Corp and further clarified in CBC Cos v Equifax, Inc The primary focus of antitrust analysis is whether competition itself has been harmed by the business practices in question, rather than the impact on specific competitors For a plaintiff to demonstrate antitrust injury, their harm must stem from an anticompetitive feature of the conduct being challenged.

27 violation.” 106 In other words, antitrust injury is injury a plaintiff suffers from the competition- reducing effect of the violation, not from some other effect 107

Antitrust injury does not occur when the alleged conduct enhances competition or is competitively neutral, even if it harms the plaintiff or is deemed unlawful For instance, if actions allow the plaintiff's competitors to perform better, resulting in the plaintiff's injury, it does not constitute antitrust injury Similarly, a plaintiff does not experience antitrust injury if their losses stem from the need to lower prices to compete against the defendant, particularly when such conduct leads to greater efficiency for the defendant.

To successfully recover damages in an antitrust case, the plaintiff must demonstrate an antitrust injury, even if the conduct in question is considered per se unlawful This means that establishing liability does not necessitate evidence of any actual reduction in competition.

(5) Under most circumstances, only participants in the relevant market can suffer antitrust injury (i.e., competitors, customers, or suppliers of the defendant) 112

Antitrust standing

To successfully recover damages in an antitrust case, the plaintiff must demonstrate "antitrust standing," establishing that they are a legitimate party to pursue the claim This requirement notably narrows the scope of potential parties who have suffered injury from the violation and are eligible for compensation.

The antitrust injury requirement mandates that a plaintiff can only seek recovery for losses that arise from the competition-reducing actions of the defendant, as established in 107 Atl Richfield Co v USA Petrol Co., 495 U.S 328, 344 (1990) This principle is further supported by case law, including Port Dock & Stone Corp v Oldcastle Ne., Inc., 507 F.3d 117 (2d Cir 2007) and Harper v Colo State Bd of Land Comm’rs, 248 Fed App’x 4 (10th Cir 2007).

In the case of 108 Theme Promotions, Inc v News America Marketing FSI, the Ninth Circuit ruled that an antitrust injury does not occur if the harm arises from aspects of the defendant's conduct that are either beneficial or neutral to competition, despite the conduct being illegal Similarly, the Seventh Circuit's decision in James Cape & Sons v PPC Construction Co reinforces this principle, highlighting the complexity of determining antitrust injuries in legal disputes These cases underscore the importance of evaluating the competitive implications of a defendant's actions when assessing antitrust claims.

109 Glen Holly Entm’t, Inc v Tiktronix, Inc., 352 F.3d 357 (9th Cir 2003); Midwest Gas Servs., Inc v Ind Gas Co.,

317 F.3d 703 (7th Cir 2003); Balaklaw v Lovell, 14 F.3d 793 (2d Cir 1994)

110 Fair Issac Corp v Experian Information Solutions, Inc., 650 F.3d 1139 (8 th Cir 2011)

111 Atl Richfield, supra; Pace Elecs., Inc v Canon Computer Sys., Inc., 213 F.3d 118 (3d Cir 2000)

112 E.g., Ethypharm S.A v Abbot Labs., 707 F.3d 223, 233 (3d Cir 2013) (“Generally, antitrust injury ‘is limited to consumers and competitors in the restrained market.”)

113 See generally Associated Gen Contractors v Cal State Council of Carpenters, 459 U.S 519 (1983) (the seminal decision)

114 E.g., Del Valley Surgical Supply, Inc v Johnson & Johnson, 523 F.3d 1116 (9th Cir 2008)

Antitrust standing is significantly narrower than constitutional standing under Article III of the Constitution, which requires proof of an actual or imminent injury and a likely favorable judicial response In contrast, antitrust standing necessitates more stringent criteria; without constitutional standing, a plaintiff cannot establish antitrust standing This concept is a threshold legal question assessed from the complaint's face While Article III standing is jurisdictional, antitrust standing is not Courts evaluate six factors to determine a plaintiff's antitrust standing.

(1) The degree of causal connection between the violation and plaintiff’s injury;

(2) The defendant’s intent and whether it intended to harm plaintiff;

(3) The nature of plaintiff’s injury, particularly whether plaintiff is a customer or competitor in the relevant market in which competition is adversely affected by the alleged violation;

(4) The directness of the injury, including whether other victims are injured more directly than the plaintiff and are likely to sue;

(5) The degree to which plaintiff’s damage claim is speculative; and

(6) The risk of duplicative recoveries and problems in apportioning damages 120

Antitrust standing necessitates that a party must exceed the fundamental requirements of 'case or controversy' or 'injury in fact' as stipulated by Article III of the Constitution, as established in Sunbeam TV Corp v Nielsen Media Research, Inc., 711 F.3d 1264, 1270 (11th Cir 2013) This principle is further supported by cases such as Gerlinger v Amazon.com, Inc., 526 F.3d 1253 (9th Cir 2008) and Ross v Bank.

Am., N.A., 524 F.3d 217 (2d Cir 2008); NicSand, Inc v 3M Co., 507 F.3d 442 (6th Cir 2007) (en banc); Novell, Inc v Microsoft Corp., 505 F.3d 302 (4th Cir 2007)

116 Summers v Earth Inst., 555 U.S 488 (2009); Osborn v Visa, Inc., 797 F.3d 1057 (D.C Cir 2015)

117 E.g., Duty Free Americas, Inc v Estee Lauder Cos., 797 F.3d 1248 (11 th Cir 2015) (since plaintiff lacked Article III standing, “it plainly follows that it cannot establish ‘antitrust standing’”)

118 E.g., Del Valley Surgical Supply, supra; JES Props., Inc v USA Equestrian, Inc., 458 F.3d 1224 (11th Cir

In Dominguez v UAL Corp., the D.C Circuit emphasized that Article III of the Constitution restricts federal judicial power to genuine "Cases" and "Controversies." The court highlighted that standing is essential for any jurisdictional exercise, asserting that without standing, a dispute does not qualify as a proper case or controversy, thereby rendering the courts unable to adjudicate it.

120 See Associated General Contractors, supra; Sterling Merch., Inc v Nestle, S.A., 656 F.3d 112 (1 st Cir 2011); In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677 (2d Cir 2009); Ross v Bank of Am., N.A., 524 F.3d 217

(2d Cir 2008); Novell, Inc v Microsoft Corp., supra; Paycom Billing Servs., Inc v MasterCard Int’l, Inc., 467 F.3d 283 (2d Cir 2006)

To establish antitrust standing, plaintiffs must demonstrate two key requirements: first, they must suffer an antitrust injury, and second, they must be an efficient enforcer of antitrust laws, typically meaning they are the party most directly harmed by the violation While antitrust injury is essential for standing, it alone is not sufficient; without qualifying as an "antitrust injury," the plaintiff cannot claim standing Generally, plaintiffs are expected to be either competitors or customers within the relevant market to meet the criteria for antitrust standing and to substantiate their claims of injury.

In antitrust cases, a key exception exists when a plaintiff, who is neither a customer nor a competitor in the relevant market, suffers an injury that is closely linked to competition in that market Specifically, if the plaintiff is a direct target of unlawful conduct and their injury is essential to harming competition, they may have standing However, courts exhibit varying interpretations and applications of this principle, leading to several categories of plaintiffs who typically lack antitrust standing.

(1) “Indirect purchasers” suing for overcharges resulting from the violation cannot recover damages but may obtain equitable relief

An "indirect purchaser" refers to a buyer who acquires products from a seller, known as the "direct purchaser," who has obtained those products from parties involved in an antitrust violation For instance, in a scenario where a cartel of widget manufacturers conspires to inflate widget prices, the wholesalers purchasing directly from the manufacturers are considered direct purchasers, while the retailers who buy from the wholesalers are classified as indirect purchasers Direct purchasers have the legal right to sue and recover the full amount of any overcharges incurred due to the antitrust violation.

121 Palmyra Park Hosp., Inc v Phoebe Putney Mem’l Hosp., 604 F.3d 1291 (11th Cir 2010); Port Dock & Stone

Corp v Oldcastle Ne., Inc., 507 F.3d 117 (2d Cir 2007); Tal v Hogan, 453 F.3d 1244 (10th Cir 2006)

In evaluating antitrust standing, several factors are critical, with the establishment of antitrust injury being the most significant, as highlighted in Theme Promotions, 539 F.3d at 1055 Key cases such as Sunbeam TV Corp v Nielsen Media Research, Inc., NicSand, Inc v 3M Co., and In re Canadian Imp Antitrust Litig emphasize the importance of demonstrating this injury in legal proceedings.

In antitrust law, a plaintiff must typically be either a competitor or a consumer in the relevant market to establish standing for a lawsuit, as demonstrated in cases like McCullough v Zimmer, Inc and Jebaco, Inc v Harrah’s Operating Co This principle is further supported by the ruling in Norris v Hearst Trust, which emphasizes that those who do not fit these categories generally do not suffer antitrust injury.

124 Blue Shield v McCready, 457 U.S 465, 484 (1982) (the seminal case); see also Novell, Inc v Microsoft Corp., supra; Caruna v Gen Motors Corp., 204 Fed App’x 511 (6th Cir 2006)

Direct purchasers often pass on part or all of the overcharge resulting from antitrust violations to their customers, known as indirect purchasers However, indirect purchasers generally lack the standing to recover damages from the violators, even if they have suffered harm due to the overcharge Additionally, indirect purchasers cannot claim damages from direct purchasers since they were not involved in the violation There are, however, three specific exceptions to this principle that allow for potential recovery by indirect purchasers.

In cases where the contract between the direct and indirect purchaser is strictly a cost-plus agreement for a specified quantity of the product, it is evident that the full overcharge incurred by the direct purchaser has been transferred to the indirect purchaser.

(ii) Where the direct purchaser was a co-conspirator with its suppliers in the violation so that the plaintiff is a direct purchaser from at least one of the conspirators; 127 and

(iii) Where the direct purchaser is effectively controlled by the conspirators 128

(c) Lower courts have refused to create additional exceptions to the indirect- purchaser principle, even in situations where its rationales are inapplicable 129

Many states have implemented antitrust statutes that allow indirect purchasers to seek damages under state antitrust laws These state laws remain valid and are not overridden by federal antitrust regulations.

The direct purchaser rule, established in 125 Ill Brick Co v Ill., 431 U.S 720 (1977), asserts that only customers who buy goods or services directly from the alleged violator can claim damages This principle is supported by various cases, including Kan v UtiliCorp United, Inc., 497 U.S 199 (1990), and Lakeland Reg’l Med Ctr v Astellas US, 763 F.3d 1280 (11th Cir 2014), which clarify that the rule does not extend to claims for injunctive and declaratory relief Additional cases such as Simon v Keyspan Corp., 694 F.3d 196 (3d Cir 2012), and In re ATM Fee Antitrust Litig., 686 F.3d 741 (9th Cir 2012), further illustrate the application of this rule in antitrust litigation.

Exp Antitrust Litig., 533 F.3d 1 (1st Cir 2008); Kendall v VISA U.S.A.,Inc., 523 F.3d 1116 (9th Cir 2008)

126 Kan v UtiliCorp United, supra; Del Valley Surgical Supply, Inc v Johnson & Johnson, 523 F.3d 1116 (9th Cir

Amount of damages

To establish damages in an antitrust violation case, the plaintiff must demonstrate the fact of damage with reasonable certainty, after which the burden of proving the exact amount of damages is less stringent Courts, including the Supreme Court, have clarified that plaintiffs are not required to provide an exact figure but rather a reasonable estimate that is not based on conjecture or speculation The primary focus in calculating damages is to assess the plaintiff’s hypothetical situation had the violation not occurred, which may involve evaluating lost profits, the overall value of the business, or the excess amount paid due to the violation, depending on the specific nature and impact of the antitrust infringement.

131 For citations to numerous decisions, see 1 John J Miles, Health Care & Antitrust Law § 9:7, at 9-88 n.35 (Supp

132 E.g., Cyntegra, Inc v IDEXX Labs., Inc., 322 Fed App’x 569 (9th Cir 2009) (per curiam)

133 E.g., Continental Airlines, Inc v United Airlines, Inc., 136 F Supp 2d 542 (E.D Va 2001), vacated on other grounds, 277 F.3d 499 (4th Cir 2002); Microbix Biosys., Inc v Biowhittaker, Inc., 172 F Supp 2d 680 (D Md

2000), aff’d, 11 Fed App’x 279 (4th Cir 2001)

134 Bigelow v RKO Pictures, Inc., 327 U.S 251 (1946); see also Texaco, Inc v Hasbrouck, 496 U.S 543 (1990);

In the case of Magnetar Techs Corp v Intamin, Ltd., 801 F.3d 1150 (9th Cir 2015), the court emphasized that plaintiffs are required to present sufficient evidence to ensure that juries do not resort to speculation or guesswork when deciding the amount of damages to award This principle underscores the importance of clear and concrete evidence in litigation, particularly in cases involving financial compensation.

Antitrust Litig., 527 F.3d 517 (6th Cir 2008); El Aguila Food Prods., Inc v Gruma Corp., 131 Fed App’x 450 (5th

Antitrust Defenses

Statute of limitations

Section 4B of the Clayton Act establishes a four-year statute of limitations for recovering damages, while actions for equitable relief are not subject to this statute but are influenced by the doctrine of laches Courts refer to the four-year limit on damage claims when evaluating whether an equitable claim is barred by laches Typically, the statute of limitations commences at the moment an unlawful act occurs that causes harm to the plaintiff.

135 See generally ABA Section of Antitrust Law, Proving Antitrust Damages: Legal and Economic Issues (2d ed

136 See, e.g., El Aguila Food Prods., supra

137 Id.; Magnetar Techs Corp v Intamin, Ltd., 801 F.3d 1150 (9 th Cir 2015) (granting defendants summary judgment, in part because plaintiff failed to segregate the losses caused by lawful acts); Concord Boat Corp v

Brunswick Corp., 207 F.3d 1039 (8th Cir 2000); In re Brand Name Prescription Drugs Antitrust Litig., 186 F.3d

781 (7th Cir 1999); In re Linerboard Antitrust Litig., 497 F Supp 2d 666 (E.D Pa 2007)

138 E.g., Pierce v Ramsay Winch Co., 753 F.2d 416 (5th Cir 1985)

In the case of Oliver v SD-3C LLC, the Ninth Circuit established that a four-year statute of limitations serves as a guideline for applying the doctrine of laches Similarly, in Little Rock Cardiology Clinic, PA v Baptist Health, the court highlighted that antitrust claims seeking equitable relief are also subject to laches, noting that some courts consider the four-year statutory limitation period for damage actions as a reference when evaluating whether equitable claims may be barred.

In the case of Zenith Radio Corp v Hazeltine Research, Inc., the Supreme Court established that the statute of limitations for legal claims begins at the moment the injury occurs, rather than when the plaintiff first experiences its effects This principle is further supported by the Travel Agent Commission Antitrust Litigation, which reiterates that the clock starts ticking from the cause of the injury Additionally, RX.com v Medco Health Solutions highlights the importance of recognizing the timing of injuries in legal contexts.

394 (5th Cir 2009); Toledo Mack Sales & Serv., Inc v Mack Trucks, Inc., 530 F.3d 204 (3d Cir 2008); GO

Computer, Inc v Microsoft Corp., 508 F.3d 170 (4th Cir 2007)

The statute of limitations serves as an affirmative defense, requiring the defendant to explicitly plead it in their answer and prove that it prevents the plaintiff's claim Courts have established that the Twombly/Iqbal "plausibility" standard applies to these defenses, necessitating that defendants provide sufficient factual context to support their claims, rather than relying on vague assertions Additionally, various factors can influence the limitations period, potentially extending, restarting, or initiating a new timeline for claims.

Continuing violations occur when a plaintiff suffers ongoing harm from repeated violations over time, stemming from an initial injury This includes new acts that are part of a "continuing conspiracy" among the defendants, highlighting the persistent nature of the wrongdoing.

Each new injury caused by an ongoing violation initiates a fresh limitations period for claiming damages related to that specific act However, damages from prior incidents that occurred more than four years before the lawsuit is filed are not eligible for claims.

To initiate a new limitations period, the subsequent act must be both an independent action and cause new, accumulating harm to the plaintiff There is some variance among different circuits regarding which actions qualify as sufficient to restart the limitations period versus those that simply reaffirm prior acts.

Fraudulent concealment occurs when defendants actively hide a violation that causes harm to the plaintiff, delaying the start of the statute of limitations This means the time limit for the plaintiff to file a claim does not begin until they are aware, or should reasonably be aware, of the violation.

(a) Fed R Civ P 9(b) requires that plaintiff plead fraudulent conduct with particularity

(b) To prove fraudulent concealment, the plaintiff must plead and show: (i) Affirmative acts by the defendants to conceal their conduct;

142 E.g Hazeltine Research, supra; Toledo Mack Sales & Serv., supra; Champagne Metals v Ken-Mac Metals, Inc.,

In the context of alleged conspiracy, a cause of action accrues each time a plaintiff suffers injury due to the defendants' actions, with the statute of limitations beginning from the date of that act This principle allows plaintiffs to seek recovery for damages incurred from each specific act committed by the defendants.

143 Samsung Elecs Co v Panasonic Corp., 747 F.3d 1199 (9 th Cir 2014); Champagne Metals, supra; Varner v

Peterson Farms, 371 F.3d 1011 (8th Cir 2004); DXS, Inc v Siemens Med Sys., Inc., 100 F.3d 462 (6th Cir 1996); Kaw Valley Elec Co-op Co v Kan Elec Power Co-op, Inc., 872 F.2d 931 (10th Cir 1989)

(ii) That the plaintiff did not discover the facts forming the basis of its claim during the limitations period; and

(iii) That the plaintiff exercised due diligence in attempting to discover the facts and the violation 144

The circuits vary in their definitions of the necessary affirmative actions required to conceal a violation, as well as the evidence a plaintiff must present to demonstrate due diligence in uncovering the violation.

Speculative damages are subject to a limitations period that only commences once the plaintiff's damages can be reasonably determined However, uncertainty regarding the extent or amount of damages does not delay the statute of limitations, as it is the existence of damages, not their precise measurement, that is crucial.

Under Section 5(i) of the Clayton Act, the statute of limitations is paused during government enforcement actions and for one year afterward, allowing individuals to file private civil lawsuits for damages related to the issues raised in the government's case.

2 In pari delicto or “equal involvement” defense a “In pari delicto” means “of equal fault,” i.e., the plaintiff itself was a participant in the unlawful conduct As a general matter, courts have rejected this as a defense in antitrust cases 150

144 Carrier Corp v Outokumpu Oyj, 673 F.3d 430 (6 th Cir 2012); GO Computer, Inc v Microsoft Corp., 508 F.3d

170 (4th Cir 2007); Hamilton County Bd of Comm’rs v NFL, 481 F.3d 310 (6 th Cir 2007); Morton’s Mkt., Inc v

Gustafson’s Dairy, Inc., 198 F.3d 823 (11th Cir 1999)

145 As to the necessary affirmative acts to conceal the violation, see Supermarket of Marlington, Inc v Meadow

Gold Dairies, Inc., 71 F.3d 119 (4th Cir 1995)

146 Hazeltine Research, supra; Midwestern Mach Co v Nw Airlines, Inc., 392 F.3d 265 (8th Cir 2004)

147 E.g., Kabealo v Huntington Nat’l Bank, 17 F.3d 822 (6th Cir 1994)

149 For discussions of this provision and how it applies, see Minn Mining & Mfg Co v New Jersey Wood Finishing

Co., 381 U.S 311 (1965); Novell v Microsoft Corp., 505 F.3d 302 (4th Cir 2007); In re Evanston Nw Healthcare Corp., 2008-1 Trade Cas (CCH) ả 76,182 (N.D Ill 2008)

150 Perma Life Mufflers, Inc v Int’l Parts Corp., 392 U.S 134 (1968); Gatt Commc’ns, Inc v PMC Assocs., LLC,

The Supreme Court has warned against the indiscriminate use of the in pari delicto defense, emphasizing that antitrust interests are best protected by ensuring that private actions consistently deter unlawful behavior.

35 b Some courts, however, have, constructed a so-called “complete involvement” or

“equal involvement” defense, under which the plaintiff is precluded from recovering damages where it bears at least equal responsibility with the defendant for the violation 151

1 Joint and several liability—Defendants in civil antitrust cases are jointly and severally liable for any damages Plaintiffs are not required to sue all participants in the violation and may recover all damages awarded from any of the defendants found liable, regardless of that defendant’s degree of responsibility for causing the damages 152

Injunctive Relief

SECTION 1 OF THE SHERMAN ACT

A Text of the Statute: “Every contract, combination , or conspiracy, in restraint of trade or commerce among the several States is illegal.” 169

Essential Elements

unreasonably restrains competition, 170 and these are the essential elements of the violation

Section 1 is essential because it highlights the tendency of individuals within the same trade to gather, often leading to discussions that culminate in conspiracies against the public or schemes to inflate prices This behavior underscores the need for regulation to ensure fair market practices and protect consumer interests.

The “Agreement” Requirement

Fact of agreement

(3) Whether the price increased occurred in the face of decreasing demand or lower costs

(4) Whether the product involved is a homogeneous, fungible, commodity product

(5) Whether demand for the product is price-inelastic

(6) Whether there are few good substitute products

(7) Whether entry barriers into the market are high

(8) Whether any of the defendants made public announcements of future price increases, thus “signaling” its competitors what it planned to do

(9) Whether the defendants have significant excess capacity

(10) Whether there are few purchasers, lacking market power as buyers

(11) Whether prices are quite transparent in the sense that the defendants can quickly discover the prices of their competitors

(12) Whether market shares have remained constant over a long period of time

(13) Whether the defendants have a history of conspiring with regard to competitive sensitive variables

(14) Whether sales are rather frequent and small rather than infrequent and large

The court evaluates various pieces of circumstantial evidence collectively to determine if they support an inference of agreement, rather than assessing each piece in isolation.

A mere recommendation from one party, along with its acceptance by a decision maker, does not establish a conspiracy between the two.

The “Unreasonable Restraint of Competition” Requirement

Quick-look rule

The Commission must first assess if the nature of the disputed conduct clearly indicates potential harm to consumers If this is the case, the conduct is classified as "inherently suspect." In such instances, the defendant must provide a plausible and legally valid competitive justification for the restraint; otherwise, it will be swiftly condemned.

If the defendant provides an explanation, the Commission is required to address it in one of two ways Firstly, the Commission can confidently assert, without needing evidence, that the restraint likely harmed consumers Alternatively, the Commission may choose a different approach to evaluate the justification.

The Commission must present compelling evidence to demonstrate the likelihood of anticompetitive effects If successful, the burden of proof then shifts to the defendant, who must prove that the restraint does not negatively impact consumers or that it has pro-competitive benefits.

“procompetitive virtues” that outweigh its burden upon consumers 264

There is no rigid template for conducting quick-look analysis, as it must be tailored to the specific circumstances of each case A full market analysis under the rule of reason may be necessary depending on the depth of analysis required to determine the restraint's net effect on competition The Supreme Court has indicated that an inquiry should be appropriate for the case at hand, focusing on the circumstances, details, and logic of the restraint.

The Role of Purpose and Intent in Section 1 Cases

In criminal antitrust cases, establishing anticompetitive intent is crucial, yet the burden of proof is relatively lenient When the per se rule is applicable, the government only needs to demonstrate that the defendant knowingly participated in the conspiracy, allowing for the inference of the necessary criminal intent.

265 N Tex Specialty Physicians v FTC, 528 F.3d 346, 361 (5th Cir 2008)

266 Cal Dental, supra, 526 U.S at 781; see also Federal Trade Comm’n & U.S Dep’t of Justice, Antitrust

is a flexible approach that adapts based on the specifics of the agreement and the market conditions This analysis emphasizes relevant factors and requires only the necessary factual examination to accurately evaluate the overall competitive impact of the agreement in question.

267 E.g., United States v Therm-All, Inc., 373 F.3d 625 (5th Cir 2004)

In criminal cases governed by the rule of reason, the government must establish that the defendant had criminal intent, specifically by demonstrating awareness of the likely competitive restraints resulting from the agreement However, it is uncommon for the Antitrust Division to pursue criminal charges for conduct evaluated under this rule.

In civil antitrust cases, proving anticompetitive intent is not a necessary requirement for establishing a Section 1 violation While some judicial decisions may imply otherwise, an intent or purpose to engage in anticompetitive behavior alone does not constitute a violation.

In civil antitrust cases, the key focus is on the actual or potential impact of the challenged conduct on competition, rather than the intentions behind it Good intentions cannot justify actions that are otherwise deemed objectionable, emphasizing that the outcome for competition is what truly matters.

3 Intent, however, often helps predict or determine whether the alleged conduct would have, or has had, anticompetitive effects, and thus intent is very relevant.

Problematic Types of Agreements Under Section 1

Horizontal price-fixing agreements

a A horizontal price-fixing agreement is any agreement among competitors that directly affects the price they charge for their product or service—“any combination which tampers with price structures.” 273

268 United States v United States Gypsum Co., 438 U.S 422 (1978)

In the context of antitrust law, cases such as Coalition for ICANN Transparency, Inc v VeriSign and William O Gilley Enterprises v Atlantic Richfield Co highlight the necessity of proving a conspiracy aimed at restraining trade under Section 1 Specifically, these rulings emphasize that demonstrating an intent to harm or restrict trade or commerce is a crucial element in establishing a valid claim.

270 E.g., United States Gypsum Co., supra, 438 U.S at 436 n.13 (stating the “general rule” that “a civil violation can be established by proof of either an unlawful purpose or an anticompetitive effect”)

271 Appalachian Coals, Inc v United States, 288 U.S 344, 372 (1933) (stating that “knowledge of actual intent is an aid in the interpretation of facts and prediction of consequences”); United States v Brown Univ., 5 F.3d 658 (3d Cir

1993) (explaining that courts often examine defendants’ intent to aid in judging the challenged conduct’s likely effect on competition)

In the case of Stop & Shop Supermarket Co v Blue Cross & Blue Shield, the court emphasized that while motive is an important factor in assessing whether concerted actions breach the Sherman Act, the key issue is whether the conduct in question unreasonably restrains trade.

273 United States v Socony-Vacuum Oil Co., 310 U.S 150, 221 (1940) (also defining a price-fixing agreement as any

A combination aimed at influencing the price of a commodity can involve actions such as raising, depressing, fixing, pegging, or stabilizing prices This concept is illustrated in the case of In re Urethane Antitrust Litig., 768 F.3d 1245 (10th Cir 2014), which highlights the legal implications of such price manipulation strategies.

The Supreme Court has emphasized that price fixing is one of the most harmful antitrust offenses The definition of price fixing is extensive, as it does not require conspirators to establish or agree on a specific price Instead, horizontal price-fixing agreements encompass arrangements among competitors regarding pricing strategies.

(3) Discounts or not to offer discounts; 278

(4) Credit terms or not to grant credit; 279

Starting prices are typically negotiable; a price-fixing agreement claim requires demonstrating (1) the existence of a conspiracy and (2) an intent to raise, lower, fix, peg, or stabilize prices.

274 FTC v Ticor Title Ins Co., 504 U.S 621, 639 (1992); see also Freeman v San Diego Ass’n of Realtors, 322 F.3d

1133, 1144 (9th Cir 2003) (“No antitrust violation is more abominated than the agreement to fix prices.”)

In the context of antitrust law, price fixing encompasses agreements among competitors to manipulate prices, regardless of whether those prices are uniform or flexible The Supreme Court in Socony-Vacuum Oil Co emphasized that the methods used for price fixing are not as critical as the existence of the agreement itself Similarly, the Ninth Circuit in Knevelbaard Dairies v Kraft Foods clarified that horizontal price fixing does not require the agreement to directly involve the final price, highlighting the broad scope of what constitutes price fixing among competitors.

277 Ariz v Maricopa County Med Soc’y, 457 U.S 332 (1982)

278 Sugar Inst v United States, 297 U.S 553 (1936); Freeman v San Diego Ass’n of Realtors, 322 F.3d 1133 (9 th Cir 2003)

279 Catalano, Inc v Target Sales, Inc., 446 U.S 643 (1980)

280 Food & Grocery Bureau v United States, 139 F.2d 973 (9th Cir 1943)

282 Plymouth Dealers’ Ass’n v United States, 279 F.3d 128 (9th Cir 1960)

(9) Jointly negotiating prices with customers; 284

(12) Purchasing surplus supply to keep it off the market; 287

Naked horizontal price-fixing agreements are considered per se unlawful under antitrust principles, making the agreement itself illegal regardless of its execution or impact on prices The Supreme Court has consistently dismissed various defenses presented in cases involving such agreements.

283 Goldfarb v Va State Bar, supra

286 In re Sulfuric Acid Antitrust Litig., 703 F.3d 1004 (7 th Cir 2012); A.D Bedell Wholesale Co v Philip Morris,

287 United States v Socony-Vacuum Oil Co., 310 U.S 150 (1940)

288 United States v Andreas, 216 F.3d 645 (7th Cir 2000)

289 See, e.g., Texaco, Inc v Dagher, 547 U.S 1, 5 (2006) (“Price-fixing agreements between two or more competitors fall into the category of arrangements that are per se unlawful.”); Socony-Vacuum Oil Co., supra,

For more than forty years, the Supreme Court has maintained a consistent stance that price-fixing agreements are inherently illegal under the Sherman Act This principle has been upheld in various cases, including Arizona v Maricopa County.

Med Soc’y, 457 U.S 332 (1982); In re Chocolate Confectionary Antitrust Litig., 801 F.3d 383 (3d Cir 2015)

Horizontal price-fixing among competitors is a well-established example of a restraint analyzed under the per se standard In the case of United States v Apple, Inc., the court reaffirmed that horizontal price-fixing conspiracies are considered the quintessential example of a per se unlawful restraint on trade.

Publication Paper Antitrust Litig., 690 F.3d 51, 61 (2d Cir 2012) (“An agreement between competitors to fix prices, known as a horizontal price-fixing agreement, categorically constitutes an unreasonable restraint, and, accordingly, is unlawful per se.”)

291 United States v United States Gypsum Co., 438 U.S 422 (1978); Socony-Vacuum Oil Co., supra

(1) That defendants did not agree on a specific price;

(2) That defendants’ agreed-on price was a “reasonable” price;

(3) That defendants were combating “ruinous competition” or “competitive abuses”;

(4) That defendants lacked sufficient power to affect prices;

(5) That defendants agreed on prices with “good intentions”;

(6) That the price-fixing agreement affected only a small amount of commerce;

(7) That the defendants lacked the ability to accomplish the agreement’s objective;

(8) That that defendants never implemented the conspiracy or engaged in any overt acts to further or accomplish it; and

(9) That price competition remained notwithstanding the price-fixing agreement 292

(10) That low prices were generating shoddy products 293

(11) That high prices were necessary to induce new entry into the market 294 g Price-fixing agreements among competing buyers, just as those among competing sellers, are per se unlawful 295

In the landmark case Socony-Vacuum Oil Co., the Supreme Court emphasized that regardless of any perceived economic justifications for price-fixing agreements, such practices are unequivocally prohibited by law The Court highlighted that these agreements pose a significant threat to the economy's core functioning, underscoring the legal stance against their reasonableness.

293 Nat’l Soc’y of Prof’l Eng’rs v United States, 435 U.S 679 (1978)

294 United States v Apple, Inc., 791 F.3d 290 (2d Cir 2015)

295 Mandeville Is Farms v Am Crystal Sugar Co., 334 U.S 219 (1948); Omnicare, Inc v UnitedHealth Group,

Buyers can infringe upon antitrust laws by creating a "buyers' cartel," as highlighted in Inc v 629 F.3d 697 (7th Cir 2011) Additionally, an agreement among employers to set employee salaries is considered per se illegal, as noted in Todd v Exxon Corp., 275 F.3d 191 (2d Cir 2001) This underscores the importance of adhering to legal standards in competitive practices.

Price fixing violates antitrust laws regardless of whether it is perpetrated by buyers or sellers, as established in High Tech Staffing Servs., Inc., 135 F.3d 740, 747 (11th Cir 1998) Additionally, buyer cartels, which aim to manipulate supplier prices below competitive levels, are deemed illegal per se, as noted in Vogel v Am Soc’y of Appraisers, 744 F.2d 598, 601 (7th Cir 1984).

Price-fixing agreements among buyers are prohibited by the Sherman Act, similar to those among sellers, regardless of whether the damage affects sellers instead of consumers (Ass’n, 2009 WL 1423378 at *3, D Ariz Mar 9, 2009).

The per se rule for price-fixing agreements requires that such agreements among buyers or sellers be "naked." In contrast, ancillary price-fixing agreements that contribute to efficiencies within a competitor integration are evaluated under the rule of reason Additionally, while attempted price fixing does not breach Section 1, a complete violation occurs once an agreement is reached, irrespective of its implementation.

(1) But the FTC has challenged attempts among competitors to collude, or invitations from one competitor to another to collude on prices, as violations of Section 5 of the FTC Act 298

A court ruled that a competitor's invitation to another to fix prices amounted to attempted monopolization under Section 2 of the Sherman Act, as acceptance of the invitation would have granted them monopoly power The Antitrust Division typically pursues criminal charges against blatant hard-core price-fixing agreements.

Agreements among competitors to exchange pricing information

Competitors often share or verify pricing through various methods, such as phone calls, meetings, social events, or trade association surveys, which constitutes an agreement under Section 1 This exchange of price or wage information among sellers can lead to three significant antitrust concerns.

(1) First, these types of exchanges can be a first step leading to a per se unlawful price-fixing agreement 302

(2) Second, agreements to exchange price information are plus factors in proving a price-fixing agreement

Agreements to exchange price information can independently violate Section 1, even without a price-fixing agreement, as they may encourage oligopolistic and interdependent pricing behavior among competitors This can lead to a situation where competitors raise their prices in a coordinated manner.

(a) Absent a price-fixing agreement, the rule of reason applies to agreements among competitors to exchange price information because the exchanges can generate procompetitive effects 304

In the case of Blomkest Fertilizer, Inc v Potash Corp., the Eighth Circuit outlined two ways in which price verification communications can violate Section 1 of antitrust laws Firstly, if an agreement to exchange such communications results in an unreasonable restraint of trade, where the anticompetitive effects surpass any benefits, it may be deemed illegal under the rule of reason Secondly, the mere exchange of price information can serve as evidence that an agreement to fix or stabilize prices exists, highlighting the potential for antitrust violations in these practices.

In legal precedents such as United States v Citizens & Southern National Bank, 422 U.S 86 (1975), it has been established that agreements to exchange pricing information can indicate the existence of price-fixing arrangements Similarly, the case of Todd v Exxon Corp., 275 F.3d 191 (2d Cir 2001), highlights that information exchange is a facilitating practice that may support inferences of price-fixing agreements, particularly in buyer agreements Additionally, Morton Salt Co v United States, 235 F.2d 573 (10th Cir 1956), reinforces the notion that price exchanges can lead to collusive price-fixing agreements.

In the case of Detroit Med Ctr., 862 F Supp 2d 624 (E.D Mich 2012), plaintiff nurses claimed that defendant hospitals engaged in a wage-fixing agreement through the sharing of wage information The court acknowledged that such a conspiracy among competing hospitals to fix wages would be treated as a per se violation of antitrust laws.

In the case of Albany Med Ctr., 728 F Supp 2d 130 (N.D.N.Y 2010), the court determined that the defendants' sharing of wage information warranted a jury's consideration of whether there was an agreement to fix nurses' wages Similarly, in Jung v Ass’n of Am Med Colls., 300 F Supp 2d 119 (D.D.C 2004), the court noted that the exchange of pricing information could imply the existence of a price-fixing agreement.

303 See generally United States v Container Corp of Am., 393 U.S 333 (1969)

The exchange of price data among competitors does not always lead to anti-competitive effects; in some cases, it can enhance economic efficiency and promote competition in the market Consequently, such exchanges are not considered a per se violation of the Sherman Act, as established in the case of United States v United States Gypsum Co (1978).

Bank, supra; United States v Giordano, 261 F.3d 1134, 1143 (11th Cir 2001) (“Exchange of price information is

Courts evaluate various circumstantial evidence factors to determine if an agreement to exchange price information could enable competitors to make interdependent pricing decisions, potentially violating Section 1 The likelihood of this effect increases under certain conditions.

(i) The relevant market is highly concentrated;

(ii) The prices exchanged are current or future prices;

(iii) The prices exchanged are firm- or transaction-specific rather than masked;

(iv) The prices exchanged are specific prices of identifiable firms rather than some form of aggregated price information such as averages, means, or percentiles;

(v) The products whose prices are exchanged are homogeneous rather than differentiated; and

(vi) demand for the products is inelastic 305 (c) Plaintiff can prove the requisite effect on competition by direct evidence as well—e.g., subcompetitive wages where employers exchange wage information 306

(d) Relating to health-care providers, Statement 6 of the federal agencies’

The Antitrust Enforcement Policy in Health Care establishes an "antitrust safety zone" that allows competing health-care providers to exchange price and cost information without fear of legal challenges This protection ensures that such exchanges are permissible, provided they meet specific criteria outlined by the agencies involved.

“extraordinary circumstances”), the exchange must meet four requirements:

(i) The collection of price or cost information must be managed by an independent third party;

To ensure compliance with legal standards, price or cost information must be at least three months old, and the exchange must involve at least five parties Such exchanges are not inherently illegal; however, they may be deemed unlawful when evaluated under a rule of reason analysis, as highlighted in Todd v Exxon Corp., 275 F.3d 198.

305 See United States Gypsum Co., supra, 438 U.S at 441 n.16; Container Corp., supra; Todd, supra (providing an extensive discussion); see generally Herbert Hovenkamp, Federal Antitrust Policy § 5.3 at 233-37 (4th ed 2011)

307 Available at http://www.ftc.gov/sites/default/files/attachments/competition-policy-guidance/statements-of- antitrust-enforcement-policy-in-health-care-august-1996.pdf

(iv) “[A]ny information disseminated must be sufficiently aggregated such that it would not allow recipients to identify the prices charged by any individual provider.”

(e) These antitrust principles apply equally to exchanges of prices charged by sellers and to exchanges of prices paid by buyers (e.g., employee wages) 308

Horizontal market-allocation agreements and agreements not to

a Horizontal market-allocation agreements are agreements among actual or potential competitors as to:

(1) The types of services they will and will not offer,

(2) The geographic areas they will and will not serve, or

Horizontal market-allocation agreements involve competitors agreeing not to compete with one another, which raises significant antitrust concerns Such agreements, particularly "naked" ones, are considered per se unlawful and are often subject to criminal prosecution by the Antitrust Division These market-allocation agreements pose a greater threat to competition than other forms of collusion, undermining the principles of a free market.

308 For the antitrust ramifications of hospitals’ exchanging information about their nurses’ salaries, see Cason-

Merenda, supra; Fleischman, supra; Jeff Miles, The Nursing Shortage, Wage-Information Sharing Among

Competing Hospitals, and the Antitrust Laws: The Nurse Wage Antitrust Litigation, 7 Hous J Health Law & Pol’y

309 See United States v Hillsdale Cmty Health Ctr., No 15-cv-1231 (E.D Mich Oct 21, 2015) (consent decree) (settling Antitrust Division challenge to agreement between hospitals not to advertise in each other’s markets)

310 Palmer v BRG of Ga., 498 U.S 46 (1990) (per curiam); United States v Topco Assocs., Inc., 405 U.S 596

(1972); In re Wholesale Grocery Prods Antitrust Litig., 752 F.3d 728 (8 th Cir 2014); In re Ins Brokerage Antitrust

Price fixing and customer allocation agreements are considered fundamental violations of antitrust law, typically analyzed under a per se standard, as established in various court rulings, including Litig., Nitro Distrib., Inc v Alitor Corp., and Augusta News Co v Hudson News Co.

Per se condemnation is generally recognized as applicable only to 'naked' market division agreements, which are those that exist independently and are not associated with a broader pro-competitive joint venture.

311 E.g., United States v Rose, 449 F.3d 627 (5th Cir 2006) (criminal prosecution holding that the per se rule applies to agreements allocating customers)

Price-fixing agreements hinder competition by influencing various factors beyond just price Similarly, market-allocation agreements can be considered ancillary restraints and may undergo rule-of-reason analysis if they are essential for an integrated venture to realize efficiency benefits Additionally, covenants not to compete, found in employment contracts, business sales, and leases, typically fall under ancillary restraints subject to rule-of-reason evaluation While an unsuccessful attempt by a competitor to allocate markets does not breach the Sherman Act, it may contravene Section 5 of the FTC Act.

Bid-rigging agreements

a Bid-rigging agreements are agreements among prospective bidders on contracts as to which will win a given bid The other bidders typically submit artificially high

“complimentary” bids to ensure the bidding procedure looks competitive Often, the conspirators rotate the winning bid on various contracts among themselves, so that each wins its

Bid-rigging agreements, whether involving sellers like road builders in construction contracts or buyers at auctions, are considered per se unlawful These practices often lead to supracompetitive prices and are subject to criminal prosecution by the Antitrust Division.

In the case of Blue Cross & Blue Shield v Marshfield Clinic, the court emphasized that interpreting antitrust law to prohibit competitors from setting prices while permitting market division would undermine competition entirely This highlights the importance of maintaining both price competition and market competition to foster a fair marketplace.

Ancillary restraints are generally viewed as less problematic than naked restraints in antitrust law, as established in the case In re Ins Brokerage Antitrust Litig., where it was noted that for a restraint to be condemned per se, it must be of a naked horizontal nature Ancillary restraints are those that contribute to the success of a larger business endeavor, as supported by precedents such as Rothery Storage & Van Co v Atlas Van Lines, Inc and Polk Bros., Inc.

Forest City Enters., Inc., 776 F.2d 185 (7th Cir 1985); Rozema v Marshfield Clinic, 977 F Supp 1362, 1374, 1378

(W.D Wis 1997) (“Market allocations that accompany and promote the success of larger endeavors are considered

Ancillary trade restraints require thorough examination under the Rule of Reason, as market allocations are deemed per se illegal unless they promote cooperative and productive activities.

314 See, e.g., Eichorn v AT&T Corp., 248 F.3d 131, 144-46 (3d Cir 2001); cf Hu v Huey, 325 F.3d 436 (7th Cir

2009) (upholding a lease restriction prohibiting the lessor from leasing space to competitors of the lessee)

315 Drug Testing Compliance Group, LLC, Dkt C-4565 (FTC Jan 21, 2016) (consent order)

316 See generally United States v Reicher, 983 F.2d 168 (10th Cir 1992) (explaining that bid rigging is any agreement among competitors by which bids are to be submitted to or withheld from a third party)

317 See United States v Rose, 449 F.3d 627 (5th Cir 2006); see also United States v Green, 592 F.3d 1057 (9th Cir

2010) (where defendant admitted that bid-rigging is a per se violation); In re Ins Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir 2010) (noting that bid-rigging agreements are per se unlawful)

Horizontal group boycotts or concerted refusals to deal

A group boycott, often referred to as a concerted refusal to deal, involves an agreement among competitors to avoid engaging with a particular competitor or with customers or suppliers associated with that competitor While group boycotts are common, their analysis under antitrust laws can be complex Early legal decisions often categorized them as per se violations; however, courts have frequently opted not to apply a strict per se standard, recognizing that such boycotts may not impact competition or could be justified for legitimate reasons A notable case illustrating these complexities is Northwest Wholesale Stationers, Inc v Pacific Stationery & Printing.

In the Supreme Court ruling, it was established that for the per se rule to be applicable, the plaintiff must demonstrate that the boycotting parties possess market power or access to essential trade relationships necessary for competitors to compete effectively If the plaintiff is required to prove the defendants' market power, the conduct cannot be deemed per se unlawful, but rather falls under a "quasi-per se" standard Currently, most courts utilize either a comprehensive rule-of-reason analysis or a condensed quasi-per se approach, which necessitates the plaintiff to establish the defendants' market power while allowing defendants to present procompetitive justifications for their refusal to deal However, even meeting these criteria does not conclusively indicate that the group boycott has a market-wide anticompetitive effect, as those participating in the boycott may not significantly impact the overall market.

In the landmark case NYNEX Corp v Discon, Inc., the Supreme Court defined a "group boycott" as a scenario where competitors collectively threaten to withdraw business from third parties unless those parties assist in harming their rival competitors This understanding was further explored in SD3, LLC v Black &.

Decker (U.S.), Inc., 801 F.3d 412 (4 th Cir 2015) (“Most often, group boycotts involve ‘horizontal agreements among direct competitors’ with the aim of injuring a rival.”)

319 E.g., Fed Maritime Comm’n v Aktiebolaget Svenska Amerika Linien, 390 U.S 238 (1968)

320 See, e.g., Rothery Storage & Van Co v Atlas Van Lines, Inc., 792 F.2d 210 (D.C Cir 1986)

322 See, e.g., Palladin Assocs., Inc v Mont Power Co., 328 F.3d 1145, 1155 (9th Cir 2003)

323 E.g., Tunica Web Adver v Tunica Casino Operators Ass’n, 496 F.3d 403, 414 (5th Cir 2007) (explaining that

“to determine the applicability of the per se rule , the district court should have analyzed the following factors:

In assessing the competitive dynamics, it is crucial to evaluate if the defendants maintain a dominant position in the relevant market, if they control access to essential elements that the plaintiff requires for competition, and if there are credible arguments regarding potential pro-competitive effects This analysis closely resembles a comprehensive rule-of-reason evaluation, as highlighted in the Anderson News case.

L.L.C v Am Media, Inc., 680 F.3d 162 (2d Cir 2012) (suggesting that some group boycotts are still per se illegal

Courts are generally hesitant to apply the per se standard to concerted refusals to deal by professional associations, sports leagues, standard-setting bodies, joint ventures, and healthcare credentialing bodies due to the uncertain impact on competition and the presence of strong justifications for such actions In contrast, vertical boycotts—where parties at different levels of production or distribution agree not to engage with certain competitors—are evaluated under the rule of reason This analysis is akin to that of exclusive-dealing agreements, focusing on the potential foreclosure effect and the risk that such agreements may enable a party to gain or sustain market power.

Joint ventures

A joint venture, while lacking a universally accepted definition, is generally understood in the context of antitrust analysis as an agreement between separate entities that leads to collaboration through partial integration of their operations This partnership enables the involved parties to jointly pursue activities such as research and development, production, marketing, sales, or purchasing.

Economic integration through joint ventures leads to enhanced efficiencies, where the combined efforts yield greater results than individual contributions, ultimately boosting overall output beyond what would be achievable independently.

(2) A joint venture, on the spectrum of degree of business integration, is between a cartel (no, or almost no, integration) and a merger (complete business integration)

The FTC and Antitrust Division Collaboration Guidelines provide a comprehensive framework for evaluating joint ventures, making them a valuable resource for understanding regulatory compliance Typically, both the establishment of joint ventures and the agreements related to their operations, such as marketing strategies, are governed by Section 1 of the Sherman Act, indicating that the actions of the venture are generally not regarded as those of a single entity.

324 NYNEX, supra, 525 U.S at 135 (stating that “precedent limits the per se rule in the boycott context to cases involving horizontal agreements among direct competitors”)

325 Federal Trade Comm’n & U.S Dep’t of Justice, Antitrust Guidelines for Collaborations Among Competitors

(2000), available at http://www.ftc.gov/systems/files/documents/public_statements/300481/00407ftcdojguidelines.pdf

Joint ventures may be subject to Section 7 of the Clayton Act if they effectively merge the businesses of the participants, resulting in a lack of competition in specific lines of business In such cases, decisions made within the joint venture, including pricing agreements, can be viewed as those of a single entity, akin to a merger Even if not classified as a single entity for antitrust purposes, the decisions of the venture may still be analyzed under the rule-of-reason framework, particularly when they involve ancillary restraints that are necessary for efficient operation The antitrust analysis of joint ventures is complex and varied, as these arrangements can differ widely in structure, participant types, functions, internal agreements, and competitive impacts In the healthcare sector, specific guidelines from the FTC and Antitrust Division further inform this analysis.

The Enforcement Policy in Health Care 331 offers crucial insights for evaluating various joint ventures established by healthcare providers It addresses hospital joint ventures that involve high-cost or advanced technology (Statement 2), as well as those related to clinical services and other costly offerings (Statement 3), and highlights the significance of joint-purchasing ventures.

(Statement 7); physician-controlled contracting joint ventures (Statement 8); and provider- controlled contracting networks comprised of other types of providers (Statement 9).

Vertical price-fixing agreements

a A vertical price-fixing (or “resale price-maintenance”) agreement is an agreement between a seller and a buyer that resells the product (e.g., a manufacturer and retailer) that

327 For a helpful discussion of joint-venture antitrust analysis, see ABA Section of Antitrust Law, Joint Ventures: An

Antitrust Analysis of Collaborations Among Competitors (2006)

330 For discussions, see American Needle, supra; Major League Baseball Props., Inc v Salvino, Inc., 542 F.3d 290 (2d Cir 2008); In re ATM Fee Antitrust Litig., 554 F Supp 2d 1003 (N.D Cal 2008) See generally Broadcast

Music, Inc v Columbia Broad Sys., 441 U.S 1 (1979); Collaboration Guidelines §§ 1.2, 3.2

331 Available at www ftc.gov/bc/healthcare/industryguide/policy/hlth3s.pdf

Vertical price-fixing agreements significantly impact the resale prices for buyers, as manufacturers may dictate the prices at which retailers must sell their products These agreements primarily restrict intrabrand competition rather than interbrand competition The antitrust history surrounding vertical price-fixing has been complex; from 1911 to 1937, such agreements were considered per se unlawful.

In 1937, Congress enacted legislation allowing states to permit vertical price-fixing agreements under "Fair Trade" laws, but this was repealed in 1975, making such agreements per se unlawful The Supreme Court clarified in 1988 that the per se rule applied only to agreements mandating specific prices from retailers In 1999, the Court further modified the rule, stating that it did not apply to agreements establishing maximum prices, reversing a previous decision Ultimately, due to the uncertain impact of vertical price-fixing on competition, the Supreme Court's 2007 ruling in Leegin Creative Leather Products, Inc v emphasized the need for a more nuanced approach.

In PSKS, Inc., 337, it was established that the rule of reason governs all vertical price-fixing agreements, which remains a contentious aspect of federal antitrust law The article notes a lack of comprehensive analysis regarding the rule-of-reason framework for these agreements Since vertical price-fixing primarily impacts intrabrand competition, antitrust concerns may arise only if interbrand competition is weak or if a party involved possesses substantial market power Additionally, any potential efficiencies resulting from such arrangements must also be taken into account.

332 Bus Elecs Corp v Sharp Elecs Corp., 485 U.S 717 (1988)

333 See Dr Miles Med Co v John D Park & Sons Co., 220 U.S 373 (1911)

338 But cf Toledo Mack Sales & Serv., Inc v Mack Trucks, Inc., 530 F.3d 204 (3d Cir 2008) (including some discussion); Christine A Varney, A Post-Leegin Approach to Resale Price Maintenance Using a Structured Rule of

339 See PSKS, Inc v Leegin Creative Leather Prods., Inc., 615 F.3d 412, 418-19 (5 th Cir 2010) (“To allege a vertical restraint sufficiently, a plaintiff must plausibly allege the defendant’s market power.”)

The rule of reason governs vertical price-fixing agreements under federal antitrust laws; however, some state attorneys general argue that the per se rule still applies under their state antitrust laws.

Vertical market-allocation agreements

A vertical market-allocation agreement occurs when a seller and a reselling buyer, such as a manufacturer and retailer, establish specific limitations on the geographic area, resale locations, customer types, or product categories for resale For instance, a manufacturer may allow a retailer to sell its products from a single location or designate exclusive territories for different retailers, prohibiting other sellers from operating in those areas.

Vertical market allocation agreements, similar to vertical price-fixing agreements, limit intrabrand competition while potentially enhancing interbrand competition and offering procompetitive benefits, such as preventing discount retailers from benefiting from the services of full-service retailers These agreements are evaluated under the rule of reason and raise antitrust concerns only if the seller or buyer possesses market power in the interbrand market, which may restrain competition, particularly when interbrand competition is weak, making intrabrand competition essential for a competitive marketplace.

Tying agreements

A tying agreement is a vertical arrangement where a seller requires a buyer to purchase a secondary product, known as the "tied" product, as a condition for buying a primary product, referred to as the "tying" product This practice can significantly impact interbrand competition in the market for the tied product.

340 See N.Y v Tempur-Pedic Int’l, Inc , 2011-1 Trade Cas (CCH) ả 77,311 (N.Y Sup Ct 2011); Cal v

Bioelements, Inc., 2011-1 Trade Cas (CCH) ả 77,306 (Cal Sup Ct 2011) (consent order)

341 See Continental T.V., Inc v GTE Sylvania, Inc., 433 U.S 36 (1977)

342 See, e.g., Generac Corp v Caterpillar, Inc., 172 F.3d 971 (7 th Cir 1999); Ajir v Exxon Corp., 185 F.3d 865 (9th Cir 1999) (Table) (unpublished opinion reprinted at 1999-2 Trade Cas (CCH) ả 72,609)

343 E.g., Eastman Kodak Co v Image Technical Servs., Inc., 504 U.S 451 (1992); It’s My Party, Inc v Live Nation,

In tying arrangements, sellers leverage their market power over a primary product, known as the 'tying product,' to compel buyers to also purchase a secondary product, referred to as the 'tied product.' This practice is illustrated in cases such as Collins Inkjet Corp v Eastman Kodak Co and Brantley v NBC, highlighting the legal implications of such market strategies.

Tying agreements occur when a buyer must purchase a tied product to obtain a tying product, raising competitive concerns about market foreclosure If substantial, this foreclosure can grant the seller significant market power over the tied product Analyzing tying arrangements can be complex and varies by court, with many mistakenly labeling them as per se violations However, traditional analysis indicates that such arrangements can be deemed unlawful under a "quasi-per se" standard, even without evidence of actual negative impacts on competition.

(1) The arrangement involves the sale of two separate distinct products or services—i.e., there are separate demands for the tying and tied products so they could be offered separately efficiently; 346

The seller possesses considerable market power in the tying product market, which is indicated by a significant market share, although a share below 30% does not suffice to demonstrate this power Additionally, the mere existence of a patent on the tying product does not automatically imply market power Typically, the plaintiff is required to define the relevant market for the tying product to establish the necessary market power.

The seller may pressure the buyer into purchasing a tied product as a prerequisite for acquiring the tying product However, mere strong persuasion or encouragement does not constitute a tying arrangement A true tying arrangement is not present if the seller offers both products separately in addition to selling them together Additionally, the pricing strategy of the products plays a significant role in determining the nature of the transaction.

344 Systemcare, Inc v Wang Lab Corp., 117 F.3d 1137 (10th Cir 1997) (en banc)

345 See, e.g., Rick-Mik Enters., Inc v Equilon Enters., LLC, 532 F.3d 963, 971 (9th Cir 2008) (“The injury is reduced competition in the market for the tied product.”); Reifert v S Cent Wis MLS Corp., 450 F.3d 312 (7th Cir

346 E.g., Jefferson Parish Hosp Dist No 2 v Hyde, 466 U.S 2 (1984); Rik-Mik Enters., supra

349 Ill Tool Works, Inc v Independent Ink, Inc., 547 U.S 28 (2006)

350 E.g., Surgical Ctr v Hosp Servs Dist., 309 F.3d 836 (5th Cir 2002)

351 E.g., Palladin Assocs., Inc v Mont Power Co., 328 F.3d 1145, 1159-60 (9th Cir 2003) (“Essential to a tying claim is proof that the seller coerced a buyer to purchase the tied product.”) (emphasis in original)

352 E.g., Trans Sport, Inc v Starter Sportswear, Inc., 964 F.2d 186 (2d Cir 1992)

74 purchasing them together is the only viable economic option for the purchaser (e.g., “bundled discounts”) may be sufficient to prove coercion; 354 and

(4) The tying arrangement affects a “not insubstantial” volume of interstate commerce in the tied-product 355 f Some courts apply additional requirements and permit the defendant to raise procompetitive justifications:

To violate Section 1, courts generally require that a tying-product seller designates a source other than itself for the buyer to purchase the tied product, and that the seller has a “direct economic interest” in the tied product's sale, such as a share in the revenues or profits from that designated source.

Recent tying decisions indicate that plaintiffs must demonstrate a tangible negative impact on competition in the tied product market This includes providing evidence of competitors being excluded from the market due to the tying arrangement or showing that, without the tie, the buyer would have sourced the tied product from alternative suppliers If the buyer would not have purchased the tied product at all, then there is no foreclosure or adverse effect on competition In contrast, older rulings suggest different interpretations.

354 E.g., Amerinet, Inc v Xerox Corp., 972 F.2d 1483 (8th Cir 1992); see also Collins Inkjet Corp v Eastman

In the cases of Kodak Co., 781 F.3d 264 (6th Cir 2015) and Cascade Health Solutions v PeaceHealth, 515 F.3d 883 (9th Cir 2008), the courts examined the implications of bundled discounts in relation to coercion in tying claims Kodak highlighted the specific circumstances under which such discounts could be deemed coercive, while Cascade remanded the case to the district court to assess whether the defendant's bundled discounts exerted coercive pressure.

355 E.g Fortner Enters., Inc v U.S Steel Corp., 394 U.S 495 (1969); see generally DSM Desotech, Inc v 3D Sys

Corp., 749 F.3d 1332 (Fed Cir 2014) (listing the elements)

356 E.g., Reifert, supra; Abraham v Intermountain Health Care, Inc., 461 F.3d 1249 (10th Cir 2006)

In Jefferson Parish, the Supreme Court noted that when a buyer is compelled to purchase a product they would not have chosen from an alternative seller in the tied product market, it does not adversely affect competition This is because no segment of the market that could have been accessible to other sellers has been blocked off.

Brantley v NBC Universal, Inc., 675 F.3d 1192 (9 th Cir 2012) (explaining that plaintiff failed to state a claim because he failed to allege any foreclosure in the tied-product market); Blough v Holland Realty, Inc., 574 F.3d

1084, 1089 (9 th Cir 2009) (“Zero foreclosure exists where the tied product is completely unwanted by the buyer

In instances where there is no negative impact on competition within the tied product market, unlawful tying arrangements cannot be established According to Reifert, compelling a buyer to acquire a product that they would not have otherwise chosen does not constitute a foreclosure of competition, thereby failing to meet the criteria for a tying violation.

In the case Corp v Int’l Trade Comm’n, 424 F.3d 1179, 1193-94 (Fed Cir 2005), the court clarified that for a tying arrangement to be considered per se unlawful, the complaining party must prove that it has an anticompetitive effect on the market for the tied product.

358 E.g., Barber & Ross Co v Lifetime Doors, Inc., 810 F.2d 1276 (4th Cir 1987)

Some courts allow defendants to present legitimate business justifications for tying arrangements If a plaintiff cannot meet specific requirements, they may still demonstrate a violation through a comprehensive rule-of-reason analysis by showing an unreasonable impact on competition in the tied-product market, necessitating the definition of the relevant market While tying arrangements are often considered per se unlawful, this is not entirely accurate Additionally, a variation known as "full-line forcing" occurs when a manufacturer mandates distributors to buy the entire product line as a condition for acquiring more popular items, which is typically evaluated under the rule of reason.

Exclusive-dealing agreements

Exclusive-dealing agreements are vertical contracts where a buyer commits to purchasing all their product or service needs from a specific seller, thereby excluding competitors, or where a seller agrees to sell exclusively to a particular buyer These agreements exemplify a broader category of exclusionary practices that can limit competitors' access to markets They can be either explicitly stated in the contract or exist in practice without formal exclusivity clauses, reflecting an actual exclusive relationship between the parties involved.

In legal cases such as Collins Inkjet Corp v Eastman Kodak Co., defendants can assert an affirmative defense, claiming that their tying arrangements promote competition or have legitimate business justifications This principle is also evident in other significant cases like PSI Repair Services, Inc v Honeywell, Inc and United States v Jerrold Electronics Corp., highlighting the ongoing discussions surrounding the legality and economic rationale behind tying arrangements in antitrust law.

360 E.g., Brantley, supra; Brokerage Concepts, Inc v U.S Healthcare, Inc., 140 F.3d 494 (3d Cir 1998)

361 See generally Sheridan v Marathon Petrol Co., 530 F.3d 590, 594 (7th Cir 2008) (“Since the normal per se rule dispenses with proof of market power, [courts] describe[] tying arrangements as ‘quasi’ per se illegal.”)

362 E.g., S Card & Novelty, Inc v Lawson Mardon Label, Inc., 138 F.3d 869 (11th Cir 1998); Smith Mach Co v

Exclusive dealing arrangements involve agreements where a buyer commits to purchasing specific goods or services solely from a designated seller for a specified duration This concept has been examined in various legal cases, including Tampa Electric Co v Nashville Coal Co and ZF Meritor, LLC v Eaton Corp These arrangements can impact market competition and are subject to legal scrutiny to ensure fair practices.

Inc v Tyco Health Group, L.P., 592 F.3d 991 (9th Cir 2010)

364 E.g., E.g., Tampa Elec., supra; ZF Meritor, LLC, supra, 696 F.3d at 270 (“[T]he law is clear that an express exclusivity requirement is not necessary because de facto exclusive dealing may be unlawful.”);

Selective contracting is a variation of exclusive contracting where a firm engages with some, but not all, parties interested in a contract This practice is prevalent in the relationship between health insurers and healthcare providers, such as hospitals and physicians, where insurers may choose specific providers to offer services to their members Similar to tying agreements, exclusive-dealing agreements can impact interbrand competition by potentially foreclosing competitors from the market For instance, if a health insurer contracts exclusively with one hospital, it may prevent that hospital's competitors from accessing a portion of the market represented by the insurer's members Conversely, a hospital may agree to serve a particular health insurer's subscribers while refraining from contracts with other health plans, thus limiting those plans' market access.

Exclusive-dealing agreements can lead to both procompetitive and anticompetitive outcomes, necessitating a rule-of-reason analysis to evaluate their impact If a significant number of buyers or sellers are excluded from accessing a substantial portion of the market for an extended period, it may enable the contract beneficiary to gain or sustain market power by effectively sidelining competitors Therefore, it's crucial to consider the efficiencies generated by such contracts when assessing their overall effects on competition.

In the case of Concord Boat Corp v Brunswick Corp., the Eighth Circuit Court indicated that Section 1 claims asserting de facto exclusive dealing could potentially be valid Similarly, in White & White, Inc v American Hospital Supply Corp., the initial ruling acknowledged the complexities of exclusive dealing claims, although it was later reversed on different legal grounds.

365 See, e.g., Abraham v Intermountain Health Care, Inc., 461 F.3d 1249 (10th Cir 2006); Stop & Shop

Supermarket Co v Blue Cross & Blue Shield, 373 F.3d 57 (1st Cir 2004)

The extent of market foreclosure is crucial in assessing the impact of exclusive dealing contracts on competition, as significant limitations on market entry or retention can adversely affect competition For instance, if such contracts restrict access to a substantial portion of the market, it may lead to diminished availability of products, potentially resulting in a shortage of competing sellers This scenario could allow the remaining competitors to engage in anti-competitive behavior without the usual checks imposed by a competitive marketplace.

Food Servs., Inc v Pontifical Catholic Univ Servs Ass’n, 357 F.3d 1, 8 (1st Cir 2004) (explaining that “at a minimum, substantial foreclosure is essential”); Omega Envtl., Inc v Gilbarco, Inc., 127 F.3d 1157 (9th Cir 1997);

Exclusive dealing can be detrimental as it allows a company to gain or sustain market power by hindering competitors from developing into effective challengers, potentially threatening the dominant firm's position (McWane, Inc., 2014 WL 556261 at *19, FTC 2014) This practice can lead to market foreclosure, limiting rivals' growth and innovation opportunities, which is crucial for maintaining a competitive marketplace.

Consumer Harm, 70 Antitrust L.J 311 (2002) (excellent discussion)

367 See Jefferson Parish Hosp Dist No 2 v Hyde, 466 U.S 2, 43-44 (1984) (O’Connor, J., concurring); Tampa

Elec., supra; McWane, Inc v FTC, 783 F.3d 814, 827 (11 th Cir 2015) (noting that “exclusive dealing arrangements

In legal proceedings, the plaintiff typically begins by defining the relevant market, which is often the market impacted by foreclosure When evaluating the competitive effects of an exclusive dealing agreement, courts take into account several factors, with the most significant being the agreement's influence on market dynamics.

(1) The percentage of the market foreclosed by the contract

(a) The “foreclosure percentage” is, by far, is the most important variable 370

(b) Most courts require proof of substantial market foreclosure as a

In assessing exclusive dealing arrangements, a "threshold" requirement is established to effectively eliminate clearly unmeritorious claims, typically involving a market foreclosure of at least 30% to 40% However, this percentage serves as a rough guideline It's crucial to consider not only the market percentage foreclosed but also the percentage of competing alternatives available Courts evaluate the legality of these arrangements under the "rule of reason," recognizing their potential procompetitive benefits This approach acknowledges that vertical exclusive dealing agreements can lead to legitimate economic advantages, such as reduced costs and stable supply, thus lacking a presumption against their legality.

Exclusive contracts are often deemed efficient as they help ensure supply, maintain price stability, secure outlets, encourage investment, and promote best efforts in various circumstances.

Menasha Corp v News Am Mktg In-Store, Inc., 354 F.3d 661 (7th Cir 2004)

368 Tampa Elec., supra; Jefferson Parish, supra; Surgical Care Ctr v Hosp Serv Dist., 309 F.3d 836 (5th Cir

369 Stop & Shop Supermarket Co., supra, 373 F.3d at 67; Brokerage Concepts, Inc v U.S Healthcare, Inc., 140 F.3d 494 (3d Cir 1998)

The legality of exclusive arrangements is determined by their potential to significantly reduce competition in a substantial portion of the market, which can negatively impact overall competition.

Orthopedic Appliances, supra (noting that under rule-reason analysis, exclusive-dealing agreements violate § 1 only if they foreclose competition in a substantial share of the relevant market)

In exclusive dealing cases, a foreclosure percentage of at least 40% has traditionally been considered a threshold for liability, as established in McWane, Inc v FTC (2015) However, some courts have indicated that a lower percentage may suffice if the defendant holds monopolistic power The Third Circuit has suggested that a foreclosure percentage between 40% and 50% is necessary, while other cases, such as Sterling Merch., have identified a range of 30% to 40% as adequate for establishing liability.

In legal discussions regarding exclusive dealing and foreclosure rates, various cases suggest that foreclosure levels below 30% to 40% are generally not a concern For instance, the 9th Circuit (2008) indicates that foreclosure rates between 40% and 70% might still be considered sufficient, while the Stop & Shop Supermarket Co case highlights that levels under 30% to 40% are unlikely to raise significant issues Additionally, the U.S Healthcare, Inc case and the United States v Microsoft Corp decision further contribute to the understanding of acceptable foreclosure thresholds in antitrust matters.

Healthsource, Inc., 986 F.2d 589 (1st Cir 1993) As a general rule, foreclosure of less than 30% of the market should not warrant serious antitrust concern

78 sellers foreclosed by the arrangement But the percentage of foreclosure is only a first step—a threshold requirement or screen 372

(2) The duration of the contract 373

(a) All else equal, the longer the term of the exclusive arrangement, the more adverse its effect on competition is likely to be

A long nominal term in a contract, such as a 20-year exclusive agreement, can have a significantly shorter actual duration if it allows for termination without cause on short notice, like a 30-day notice period.

(c) On the other hand, the nominal term of the contract can understate its actual duration, e.g., where a party has a “strong economic incentive” to extend the exclusive relationship 375

(d) In general, an exclusive contract of one or two years, depending on other factors, should usually not warrant concern 376

SECTION 2 OF THE SHERMAN ACT

A Text of the Statute: “Every person who shall monopolize, 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 shall be deemed guilty of a felony.” 383 Thus, Section 2 encompasses three distinct violations: (1) monopolization, (2) attempted monopolization, (3) and conspiracies to monopolize.

Single-Firm Violations

require no agreement as Section 1 violations do 384 They are “single-firm” violations.

Market Power Plus Exclusionary Conduct

and attempted monopolization provisions apply to the “exclusionary” or “predatory” conduct of firms that already have substantial market power 385

Monopsonization

buyer side 386 “Monopsonistic practices by buyers are included within the practices prohibited by the Sherman Act.” 387 Monopsonization results when a firm with a substantial market share as

Anesthetists v Unity Hosp., 208 F.3d 655 (8th Cir 2000); CDC Techs., Inc.v IDEXX Labs., Inc., 186 F.3d 74 (2d

Cir 1999); Paddock Publ’ns, Inc v Chicago Tribune Co., 103 F.3d 42 (7th Cir 1996)

In the case of Kolon Industries v E.I DuPont De Nemours & Co., the court emphasized that after a plaintiff proves significant market foreclosure, it is essential to also show that the conduct in question negatively affects overall market competition.

384 E.g., Spectrum Sports, Inc v McQuillan, 506 U.S 447, 454 (1993) (explaining that “while § 1 forbids contracts or conspiracies , § 2 addresses the actions of single firms that monopolize or attempt to monopolize”)

385 See Eastman Kodak Co v Image Technical Servs., Inc., 504 U.S 451, 488 (1992) (Scalia, J., dissenting)

Section 2 is applicable when a defendant's significant power, along with exclusionary or anticompetitive actions, poses a threat to the competitive landscape, potentially undermining corrective market forces and allowing the defendant to maintain or enhance their concentration of power.

Monopsony power refers to the market dominance held by buyers, analogous to how monopoly power represents seller dominance This concept highlights that a monopsony operates on the purchasing side of the market, similar to how a monopoly functions on the selling side, and is often referred to as a "buyers' monopoly."

387 Campfield v State Farm Mut Auto Ins Co., 532 F.3d 1111, 1118 (10th Cir 2008); Telecor Commc’ns, Inc v

Sw Bell Tel Co., 305 F.3d 1124 (10th Cir 2002)

81 a buyer engages in predatory or exclusionary conduct with respect to other actual or potential buyers There are few monopsonization decisions, and the law is not well-developed 388

Monopolization and Attempted Monopolization by Non-Competitors

firm is unable, as a matter of law, to monopolize or attempt to monopolize (or monopsonize) a relevant market in which it is not a competitor 389

Monopolization

Monopoly power

a Legal definition—“the power to control prices or exclude competition.” 393 This definition, however, is both redundant and overinclusive because a firm cannot control prices

The case In re Se Milk Antitrust Litig highlights that § 2 of antitrust law addresses monopsonization, attempted monopsonization, and conspiracies to monopsonize, in addition to violations on the seller side Furthermore, it establishes that holding a 40% market share can be enough to demonstrate monopsony power.

389 E.g., Name.space, Inc v Interet Corp for Assigned Names & Numbers, 795 F.3d 1124 (9 th Cir 2015); Abraham

& Veneklasen Joint Venture v Am Quarter Horse Ass’n, 776 F.3d 321 (5 th Cir 2015); Lucas v Citizens Commc’ns

Co., 244 Fed App’x 774 (9th 2007) (per curiam); Spanish Broad Sys v Clear Channel Commc’ns, Inc., 376 F.3d

1065 (11 th Cir 2004); RxUSA Wholesale, Inc v Alcon Labs., 661 F Supp 2d 218 (E.D.N.Y 2009)

390 United States v Grinnell Corp., 384 U.S 563, 570-71 (1966); see also New York v Actavis plc, 787 F.3d 638 (2d Cir 2015); McWane, Inc v FTC, 783 F.3d 814 (11 th Cir 2015); Lenox MacLaren Surgical Corp v Medtronic,

Inc., 762 F.3d 1114 (10 th Cir 2014) (citing elements); Loren Data Corp v GXS, Inc., 501 Fed App’x 275 (4 th Cir 2012); E.I du Pont de Nemours & Co v Kolon Indus., 637 F.3d 435 (4th Cir 2011); Broadcom Corp v

Qualcomm, Inc., 501 F.3d 297 (3d Cir 2007); Heerwagen v Clear Channel Commc’ns, 435 F.3d 219 (2d Cir

In assessing monopoly power, the Commission must first establish whether the defendant possesses such power in a relevant market If so, it must then evaluate whether the defendant engaged in anticompetitive conduct to sustain that power, as highlighted in McWane, Inc and A.I.B Express, Inc v FedEx Corp., which emphasize that the willful acquisition or maintenance of monopoly power is indicative of anticompetitive behavior.

392 Allen v Dairy Farmers, 2014-1 Trade Cas (CCH) ả 78,807 (D Vt 2014); Steward Health Care Sys., LLC v

Blue Cross & Blue Shield, 2014-1 Trade Cas (CCH) ả 78,685 (D.R.I 2014) (“Logically, the same elements apply to a claim for illegal monopsonization [as to monopolization].”); White Mule Co v ATC Leasing Co., 540 F Supp 2d

393 E.g., United States v E.I du Pont de Nemours & Co., 351 U.S 377, 391 (1956); see also McWane, Inc v FTC,

783 F.3d 814 (11 th Cir 2015) (same); Lenox MacLaren Surgical Corp v Medtronic, Inc., 762 F.3d 1114 (10 th Cir

2014) (“The parties agree that ‘monopoly power’ involves two aspects: the power to control prices and the power to exclude competition.”); Morris Commc’ns Corp v PGA Tour, Inc., 364 F.3d 1288 (11th Cir 2004)

Monopoly power is defined as a significant degree of market power, and while the ability to exclude competition is important, it alone does not guarantee monopoly power The distinction between "market power" and "monopoly power" is primarily based on the size of the defendant's market share, with monopoly power requiring a larger share Although economists often use these terms interchangeably, legal definitions rely on market share size To establish monopoly power, plaintiffs can present evidence either directly or circumstantially, typically starting with a clear definition of the relevant market when using circumstantial evidence.

(1) Direct evidence—Plaintiff must prove supracompetitive prices and restricted output 398 Courts disagree on whether plaintiff must define the relevant market when proving monopoly power by direct evidence 399

(2) Circumstantial evidence—Plaintiff must prove (1) the relevant market; (2) that defendant has a dominant, monopoly-level share of that market, and (3) existence of significant entry and expansion barriers 400

(a) How large a market share is sufficient? The classic (and probably still valid) benchmarks come from United States v Aluminum Co of America.: “[Ninety percent] is

Monopoly power, as defined in Sheridan v Marathon Petroleum Co., refers to a seller's capacity to set prices above competitive levels—essentially above costs, including capital expenses—without significantly losing sales to current competitors or new market entrants, thereby ensuring the price increase remains profitable This definition is also applicable to the broader concept of market power.

In legal contexts, the distinction between market power and monopoly power is significant, as highlighted in Eastman Kodak Co v Image Technical Services, Inc., where the Supreme Court emphasized that monopoly power entails a greater threshold than mere market power Similarly, the case of Reazin v Blue Cross & Blue Shield clarifies that the difference between these two types of power lies primarily in their degree.

396 E.g., Heerwagen v Clear Channel Commc’ns, 435 F.3d 219 (2d Cir 2006); Harrison Aire, Inc v Aerostar Int’l, Inc., 423 F.3d 374 (3d Cir 2005)

397 E.g., IGT v Alliance Gaming Corp., 702 F.3d 1338, 1344 (Fed Cir 2012) (“As a threshold issue in any monopolization claim, the court must identify the relevant market.”); Chapman v N.Y State Div for Youth, 546 F.3d 230 (2d Cir 2008)

398 E.g., Broadcom, supra, 501 F.3d at 307; Forsyth v Humana, Inc., 114 F.3d 1467 (9th Cir 1999)

In legal discussions regarding monopoly power, it is noted that direct proof does not necessitate a defined relevant market, as highlighted in Broadcom However, in contrast, Heerwagen emphasizes that a plaintiff must still reference a specific market when proving claims, even when presenting direct evidence of price control or competitive exclusion.

To prove monopolization liability, a plaintiff must demonstrate that the defendant holds a dominant position within a clearly defined relevant market, as established in HDC Med., Inc v Minntech Corp and further supported by the United States v Microsoft Corp.

A market share of 60% or higher is generally considered sufficient to infer monopoly power, while shares of 33% or lower are not indicative of such dominance The determination of monopoly status remains uncertain for shares between 60% and 64%.

Market share alone does not determine monopoly power, as various factors influence a firm's ability to exert such power Notably, the presence of entry and expansion barriers plays a crucial role in this dynamic.

Monopoly power alone is not illegal; however, to prove unlawful conduct, a plaintiff must demonstrate that the defendant acquired or maintained this power through "predatory," "unreasonably exclusionary," or "anticompetitive" practices These actions primarily target competitors rather than customers, with the ultimate aim of enabling the defendant to increase prices after undermining its rivals.

In various legal cases, courts have established guidelines regarding the thresholds for determining monopoly power based on market share For instance, in Prime Healthcare Servs., Inc v Serv Employees Int’l Union, a 12% market share was deemed insufficient to infer monopoly power, while shares below 50% are generally presumed inadequate (2016 WL 806110, 9th Cir.) Similarly, Cohlmia v St John’s Med Ctr reinforced that market shares under 50% or 60% do not typically indicate monopoly power (693 F.3d 1269, 10th Cir 2012) Conversely, Cal v Safeway, Inc highlighted that a market share between 60% and 70% could establish monopoly power, further supported by subsequent rulings (615 F.3d 1171, 9th Cir 2010).

F.3d 435 (4th Cir 2011) (noting that 70% and above market shares permit a finding of monopoly power)

In the case of Rambus, Inc., the Federal Trade Commission highlighted that when barriers to entry are minimal, any effort to exert monopoly power, even by a firm holding a complete market share, will likely be met with competition from new market entrants This principle emphasizes the dynamic nature of market competition and the importance of low entry barriers in maintaining a competitive landscape.

404 E.g., Pac Bell Tel Co v linkLine Commc’ns, Inc., 555 U.S 438, 447-48 (2009) (“Simply possessing monopoly power and charging monopoly prices does not violate § 2.”); Verizon Commc’ns, Inc v Law Offices of Curtis V

The possession of monopoly power is not inherently unlawful, as established in Trinko, LLP, 540 U.S 398, 407 (2004) Similarly, United States v Int’l Harvester Co., 274 U.S 693, 708 (1927) clarifies that a corporation's size or unexerted power does not constitute an offense without unlawful conduct Moreover, Loren Data Corp v GXS, Inc., 501 Fed App’x 275, 282 (4th Cir 2012) emphasizes that monopoly power becomes illegal only when accompanied by anticompetitive behavior.

To violate Section 2, a defendant must engage in conduct to ‘foreclose competition, gain a competitive advantage, or to destroy competition.’”) Rambus, Inc v FTC, 522 F.3d 456 (2d Cir 2008); cf It’s My Party, Inc v Live Nation,

In the case of Inc., 811 F.3d 676 (4th Cir 2016), the court emphasized that a large market position is not necessarily negative, as it can result from effective business strategies and hard work The primary aim of antitrust laws is to address and penalize anticompetitive behaviors rather than to punish businesses for achieving competitive success.

In the context of antitrust law, the Supreme Court highlighted that possessing monopoly power is not inherently unlawful; it must be coupled with anticompetitive conduct to be deemed illegal (Verizon Commc’ns, 540 U.S at 407) This principle underscores the importance of evaluating both market dominance and the behavior of companies to determine the legality of their practices.

Attempted Monopolization

Predatory conduct

444 E.g., McWane, Inc v FTC, 783 F.3d 814 (11 th Cir 2015) (exclusive contracts used to maintain monopoly power); E.I du Pont de Nemours & Co v Kolon Indus., 637 F.3d 435, 441 (4th Cir 2010) (explaining that

“exclusive dealing arrangements can constitute an improper means of acquiring monopoly power”); United States v

Dentsply Int’l, Inc., 399 F.3d 181, 187 (3d Cir 2005) (“Although not illegal in themselves, exclusive dealing arrangements can be an improper means of maintaining monopoly.”); Highland Capital, Inc v Franklin Nat’l Bank,

350 F.3d 558, 565 (6th Cir 2003) (“A tying arrangement may also support a claim for monopolization.”); United

States v Microsoft Corp., 253 F.3d 34 (D.C Cir 2001) (per curiam) (tying and exclusive dealing)

445 See Prof’l Real Estate Investors, Inc v Columbia Pictures Indus., Inc., 508 U.S 49 (1993); In re Warfarin

446 Prof’l Real Estate Investors, supra, 508 U.S at 60

447 E.g., Walker Process Equip Co v Food Mach & Chem Corp., 382 U.S 172 (1965); Ritz Camera & Image,LLC v Sandisk Corp., 700 F.3d 503 (Fed Cir 2012)

448 E.g., United States v Grinnell Corp., 384 U.S 563 (1966); Fraser v Major League Soccer, L.L.C., 284 F.3d 47,

61 (1st Cir 2002) (stating that ‘“merger to monopoly’ is a feasible section 2 claim”)

This is a partial list of conduct that might be deemed predatory for purposes of Section 2 For a more complete list, see 1 John J Miles, Health Care & Antitrust Law § 5:12 (Supp 2014)

93 monopolization if the predatory conduct continues 449 The only practical difference between monopolization and attempted monopolization claims is in the necessary size of the defendant’s market share

1 Specific intent to monopolize—Specific intent in this context means the “specific intent to destroy competition or build a monopoly,” 450 or “something more than an intent to compete vigorously.” 451 The requirement in large part is redundant to the predatory-conduct element because specific intent can be inferred from predatory conduct, and thus the two elements, as a practical matter, collapse into one 452 Or, specific intent to monopolize can be proved by defendant’s statements or documents As noted before, however, care is necessary not to read too much into a defendant’s statements or documents, because almost every firm wants to monopolize its market, and its documents often disclose that “intent.” The antitrust laws encourage them to try as long as their means benefit consumers

2 Predatory conduct—The meaning and types of predatory conduct for purposes of attempted monopolization claims are the same as for monopolization claims, discussed before Conduct not predatory for purposes of a monopolization claim cannot be predatory for purposes of an attempted monopolization claim 453

Dangerous probability of actual monopolization

In cases of attempted monopolization, even if a defendant has the specific intent to dominate the market and engages in predatory behavior, a violation cannot be established if actual monopolization is not feasible or unlikely based on the market's characteristics and the alleged conduct The defendant's market share serves as a primary indicator of the dangerous probability of monopolization, with some courts necessitating a sufficient market share as a critical threshold for proving such claims.

449 Spectrum Sports, Inc v McQuillan, 506 U.S 447 (1993); New York v Actavis plc, 787 F.3d 638 (2d Cir 2015);

Superior Production P’ship v Gordon Auto Body Parts Co., 784 F.3d 311 (6 th Cir 2015); Loren Data Corp v GXS,

Inc., 501 Fed App’x 275 (4 th Cir 2012); Cascade Health Solutions v PeaceHealth, 515 F.3d 883 (9th Cir 2008);

Andrx Pharms., Inc v Elan Corp., 421 F.3d 1227 (11th Cir 2005)

450 Times-Picayune Publ’g Co v United States, 345 U.S 594, 626 (1953)

452 Id (“Such conduct may be sufficient to prove the necessary intent to monopolize.”); E.I du Pont de Nemours &

Co v Kolon Indus., 637 F.3d 435 (4th Cir 2011)

453 E.g., Olympia Equip Leasing Co v W Union Tel Co., 797 F.2d 370 (7th Cir 1986)

454 E.g., Abraham v Intermountain Health Care, 461 F.3d 1249 (10th Cir 2006)

455 HDC Med., Inc v Minntech Corp., 474 F.3d 543, 550 (8th Cir 2007) (“Dangerous probability of success is

‘examined by reference to the offender’s share of the relevant market.’”)

456 AD/SAT v Associated Press, 181 F.2d 216, 226 (2d Cir 1999) (per curiam)

94 c No magic market-share percentage is sufficient because other variables are relevant as well, but most courts require a market share of at least 40% to 50% 457 In M&M

Medical Supplies & Service, Inc v Pleasant Valley Hospital, the court explained:

(1) claims of less than 30% market shares should be presumptively rejected;

Claims ranging from 30% to 50% should generally be dismissed unless the conduct strongly indicates a likelihood of monopoly or is deemed invidious without reaching the level of per se liability Conversely, claims exceeding this threshold warrant closer scrutiny.

When assessing attempts at monopolization, a market share of 50% should be scrutinized alongside other relevant factors To establish a dangerous probability of monopolization, the plaintiff must first define the relevant market Courts evaluate various elements, including the defendant's conduct, entry barriers, competition strength, industry development, and demand elasticity Notably, a small market share, such as 10%, could still indicate monopolization risks if coupled with actions like sabotaging competitors and high entry barriers Conversely, even a substantial market share does not guarantee monopolization if evidence suggests the defendant cannot dominate the market or if acquiring the plaintiff's share would still fall short of the necessary threshold.

457 Id at 229 (33% insufficient); see Duty Free Americas, Inc v Estee Lauder Cos., 797 F.3d 1248 (11 th Cir 2015) (dangerous probability of monopolization can be inferred from a 50% or more market share); Image Technical

Servs., Inc v Eastman Kodak Co., 125 F.3d 1195 (9th Cir 1997)

In cases like Race Tires Am., Inc v Hoosier Racing Tire Corp and United States v Microsoft Corp., courts emphasize the importance of defining the relevant product and geographic market when assessing claims of attempted monopolization The evaluation must consider the defendant's economic power within that market to determine the presence of a dangerous probability of monopolization.

460 Broadcom Corp v Qualcomm, Inc., 501 F.3d 297, 318 (3d Cir 2007); Full Draw Productions v Easton Sports,

In the case of Ind Grocery, Inc v Super Valu Stores, Inc., the court determined that there was no dangerous probability of monopolization since the plaintiff acknowledged that the defendant could never control prices Similarly, in Sterling Merch., Inc v Nestle’s, S.A., the court noted that a plaintiff who continues to be profitable and has increased market share following allegedly anticompetitive actions faces significant challenges in demonstrating the existence of a dangerous probability of monopolization.

The antitrust laws prioritize the protection of competition rather than individual competitors, as evidenced by the principle that a defendant's actions, even if they drive a plaintiff out of business, do not create a dangerous probability of monopolization if multiple competitors remain in the market Furthermore, the assessment of whether there was a dangerous probability of monopolization is based on the defendant's predatory conduct at the time, requiring a forward-looking evaluation However, the actual outcome regarding whether the defendant successfully monopolized the market is significant in determining if a dangerous probability existed during the predatory actions.

Conspiracies to Monopolize

SECTION 7 OF THE CLAYTON ACT

A Text of the Statute: “No person engaged in any activity affecting commerce shall acquire, directly or indirectly, the stock and no person shall acquire the assets of another person , where in any line of 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.” 472

In sum, Section 7 prohibits mergers and all other forms of acquisition that may have significant anticompetitive effects

1 Section 7 applies to all forms of acquisitions, including the formation of joint ventures, leases, licenses, partial acquisition, and even employment

2 The acquisition need not actually lessen competition—plaintiff need not prove actual anticompetitive effects Section 7 is an “incipiency” statute, intended to prevent acquisitions before they ripen into actual unreasonable restraints of competition There only need be a

In the case of Gregory v Fort Bridger Rendezvous Ass’n, the court emphasized that a plaintiff must demonstrate that the claimed conspiracy adversely affected the competitive process Similarly, in Spanish Broadcasting, the court dismissed a conspiracy-to-monopolize claim due to the plaintiff's failure to allege any anticompetitive effects This precedent is further supported by Dickson v Microsoft Corp., highlighting the necessity of proving harm to competition in conspiracy allegations.

193 (4th Cir 2002) (indicating plaintiff must prove an anticompetitive effect)

471 E.g., Hackman v Dickerson Realtors, Inc., 595 F Supp 2d 875 (N.D Ill 2009); Boczar v Manatee Hosps &

472 Section 7 of the Clayton Act, 15 U.S.C § 18 (emphasis added)

“reasonable probability” that the acquisition will substantially lessen competition, 473 and

‘“doubts are to be resolved against the transaction.’” 474

3 Merger analysis requires a burden-shifting rule-of-reason analysis: 475 a If the merger results in a firm with a sufficiently high market share or level of market concentration (discussed later), a rebuttable presumption arises that it will be anticompetitive, and it is “prima facie unlawful.” 476 b The burden of going forward then shifts to the defendants to introduce evidence that the merger will not be anticompetitive c If the defendants meet their burden, the burden shifts back to the plaintiff to introduce additional evidence of likely anticompetitive effects

473 See generally Brown Shoe Co v United States, 370 U.S 294, 323 (1962) (noting that Congress used the term

“may” “to indicate that its concern was with probabilities, not certainties”); ProMedica Health Sys v FTC, 749 F.3d

559, 564 (6 th Cir 2014) (“Section 7 deals in ‘probabilities, not certainties.’”); Polypore Int’l, Inc v FTC, 686 F.3d

1208, 1214 (11 th Cir 2012) (“Congress enacted § 7 to ‘arrest anticompetitive tendencies in their “incipiency.”’”);

United States v Dairy Farmers of Am., Inc., 426 F.3d 850 (6th Cir 2005); United States v Bazaarvoice, Inc., 2014

To establish a violation of Section 7, the government is not required to demonstrate that a merger has led to increased prices or other anticompetitive effects; instead, it must simply prove that the merger may substantially lessen competition or tend to create a monopoly.

‘reasonable likelihood’ or anticompetitive effects in the relevant market,” but “an ephemeral possibility’ of anticompetitive effect is insufficient”); see also U.S Dep’t of Justice & Fed Trade Comm’n, Horizontal Merger

Guidelines (“Merger Guidelines”) § 1 (2010), available at http://www.ftc.gov/os/2010/08/10081hmg.pdf (“[T]hese

Merger enforcement guidelines emphasize the need to address competitive issues early on, aligning with congressional intent They highlight that certainty regarding anticompetitive effects is often unattainable and not a prerequisite for deeming a merger illegal.

474 FTC v OSF Healthcare Sys., 852 F Supp 2d 1069,1073 (N.D Ill 2012) (quoting FTC v Elders Grain, Inc., 868 F.2d 901, 906 (7 th Cir 1989)); see also ProMedica Health Sys., 2011 WL 1155392 (FTC Mar 22, 2012)

475 For a recent explanation, see FTC v Sysco Corp., _ F Supp 3d _, _, 2015 WL 3958568 at *9 (D.D.C June 23, 2015):

[T]he FTC bears the initial burden of showing that the merger would lead to “undue concentration in the market for a particular product in a particular geographic area.”

The evidence presented creates a presumption that the merger will significantly reduce competition Consequently, the responsibility falls on the defendant to counter this presumption by demonstrating that the market-share statistics do not accurately reflect the competitive landscape.

The potential impact of a merger on market competition is significant If the defendant can effectively counter the presumption of anticompetitive effects, the responsibility to provide further evidence then shifts to the government However, the ultimate burden of proof regarding anticompetitive consequences consistently lies with the government throughout the process.

476 Merger Guidelines § 5.3 E.g., St Alphonsus Med Ctr v St Luke’s Health Sys., 778 F.3d 775, 785 (9 th Cir

2015) (“A prima facie case can be established simply by showing high market share.”); ProMedica Health Sys v

In cases such as FTC v 749 F.3d 559 (6th Cir 2014) and Polypore Int’l, Inc v FTC, 686 F.3d 1208 (11th Cir 2012), the courts established that when the government demonstrates that a company holds a substantial share of the relevant market, leading to increased market concentration, it is the responsibility of the defendant to provide evidence that counters the government's market share data and its implications for competition.

98 d The plaintiff always bears the ultimate burden of persuasion 477

4 Although private plaintiffs may challenge mergers, almost all antitrust merger challenges are enforcement actions by the Antitrust Division or FTC The vast majority of cases are brought prior to consummation as preliminary-injunction actions to block the merger, 478 which means that the court must predict the merger’s likely effect But the agencies have also challenged consummated mergers where direct evidence of actual post-merger price increases indicated their anticompetitive effects 479

5 The government’s burden in obtaining preliminary injunctions blocking mergers is fairly lenient Where the motion for preliminary injunction is brought by the FTC, the court’s role is not to decide whether the transaction violates Section 7, but rather whether the merger’s lawfulness appears sufficiently in doubt that it should be held in abeyance until the FTC, through its administrative trial process, can examine the transaction in greater detail to make that determination 480

6 Importantly, “‘Section 7 does not require proof that a merger has caused higher prices in the affected market All that is necessary is that the merger create an appreciable danger of such consequences in the future.’” 481

7 The Supreme Court has not decided a merger case on substantive grounds since

1975 482 Accordingly, most decisional guidance comes from lower court decisions and the enforcement agencies’ Horizontal Merger Guidelines

477 See generally United States v Citizens & S Nat’l Bank, 422 U.S 86 (1975); Chicago Bridge & Iron Co., N.V v

FTC, 534 F.3d 410 (5th Cir 2008); FTC v H.J Heinz Co., 246 F.3d 708 (D.C Cir 2001); United States v

In the case of Bazaarvoice, Inc., 2014 WL 203966 (N.D Cal 2014), a burden-shifting analysis was outlined, while the ProMedica FTC Decision and the subsequent Federal Court Decision (FTC v ProMedica Health Sys., 2011 WL 1219281, N.D Ohio Mar 29, 2011) further explored antitrust implications Additionally, FTC v Lab Corp of Am (2011-1 Trade Cas (CCH) ả 77,348, C.D Cal 2011) contributed to the understanding of competitive practices in the healthcare sector.

478 E.g., FTC v Whole Foods Mkt., Inc., 548 F.3d 1028 (D.C Cir 2008)

In the case of Evanston Northwest Healthcare Corp., the merger, which was finalized in 2000, faced challenges from the FTC in 2004, leading to a final order issued in 2008 This situation highlights the complexities of consummated merger challenges, as discussed by J Thomas Rosch, a commissioner at the FTC, in his remarks at the ABA Section of Antitrust Law Spring Meeting on March 29, 2012.

The FTC typically secures a preliminary injunction against mergers by presenting significant and complex questions that warrant a detailed investigation, as highlighted in Whole Foods Market, where it was noted that the district court should not demand the FTC to demonstrate the merits at this stage.

FTC v OSF Healthcare Sys., 852 F Supp 2d 1069 (N.D Ill 2012) (granting FTC motion to enjoin a hospital merger)

481 E.g., St Alphonsus Med Ctr v St Luke’s Health Sys., 778 F.3d 775, 788 (9 th Cir 2015)

482 See United States v Citizens & S Nat’l Bank, 422 U.S 86 (1975)

8 There is no statute of limitations for challenging mergers and obtaining injunctive relief 483

Categories of Mergers

Horizontal mergers occur between competing sellers or buyers, including those involving potential competition These mergers involve firms that are either on the verge of entering the market, thereby influencing the competitive dynamics, or would have entered the market if not for the merger, which would have led to a decrease in market concentration.

2 Vertical—Mergers between firms at different levels in the chain of distribution—i.e., a firm and its customer or supplier 486

A conglomerate merger occurs between firms that do not share a horizontal or vertical relationship, which means the merging companies may either compete in the future or have no connection whatsoever This article focuses specifically on horizontal mergers, as they are primarily addressed in Section 7 due to their potential to eliminate direct competition between the merging entities.

Regulatory agencies are increasingly scrutinizing a new type of merger known as "cross-market" or "adjacent market" mergers These involve companies operating in different product or geographic markets, meaning they are not traditional competitors However, when combined, these entities may have the potential to exert significant market power The understanding of how such mergers could negatively impact competition is still in its early stages.

483 United States v E.I du Pont de Nemours & Co., 353 U.S 586 (1957)

485 For a recent example, see FTC v Steris Corp., 2015 WL 5657294 (N.D Ohio 2015)

486 See generally Ford Motor Co v United States, 405 U.S 562 (1972) This outline does not discuss vertical mergers, but see ABA Section of Antitrust Law, Antitrust Law Developments 386-92 (7 th ed 2012)

487 See generally Antitrust Law Developments, supra, at 392-93 For a relatively recent example of the analysis of mergers between potential competitors, see Ginsburg v InBev NV/SA, 623 F.3d 1229 (8th Cir 2010)

488 See generally Gregory S Vistnes & Yianis Sarafidis, Cross-Market Mergers: A Holistic Approach, 79

Horizontal Mergers

The Antitrust Division and FTC Merger Guidelines

resource for analyzing horizontal mergers are the federal enforcement agencies’ Horizontal

Merger Guidelines 489 issued in August 2010 a The Merger Guidelines are not “the law,” but they explain how the Antitrust

Division and FTC analyze horizontal mergers and the circumstances under which they likely will challenge them And courts frequently apply the Merger Guidelines in deciding merger cases 490

Reasons for antitrust concern

entrench market power or to facilitate its exercise.” 491

Potential anticompetitive effects

Concerns surrounding the merger include the potential for the newly formed entity to gain significant market power, which could lead to exclusionary or predatory practices against competitors Additionally, the merger may result in increased market concentration, fostering an oligopoly where firms' pricing decisions become interdependent This interdependence can stabilize or elevate prices beyond competitive levels, as economic theory suggests that higher market concentration typically correlates with poorer market performance and increased prices.

489 U.S Dep’t of Justice & Federal Trade Comm’n, Horizontal Merger Guidelines (Aug 19, 2010), available at www.ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf

490 See ProMedica Health Sys v FTC, 749 F.3d 549, 565 (6 th Cir 2014) (noting that the court considers the Merger

Guidelines “useful but not binding on us”); Chicago Iron & Bridge, supra, 534 F.3d at 434 (explaining that “the

Merger Guidelines are not binding on the courts and agency during adjudication but are only highly persuasive authorities as a ‘benchmark of legality.’”); FTC v CCC Holdings, Inc., 605 F Supp 2d 26, 37 (D.D.C 2011)

(noting that “the Merger Guidelines are not binding on the Court”)

491 Merger Guidelines § 1 (emphasis added); see also FTC v H.J Heinz Co., 246 F.3d 708, 713 (D.C Cir 2001) (“Merger enforcement, like other areas of antitrust, is directed at market power.”)

494 For a merger raising both concerns, see United States v H&R Block, Inc., 833 F Supp.2d 36 (D.D.C 2011)

495 Merger Guidelines § 1 (noting that the “enhanced market power” resulting from a merger “may also make it more likely that the merged entity can profitably and effectively engage in exclusionary conduct”)

The merger enhances the ability of firms to exert market power by fostering interdependent decision-making, a phenomenon known as "coordinated interaction" or "tacit collusion," which refers to collusion occurring without formal agreements According to the Merger Guidelines, this type of interaction can significantly impact market dynamics.

Coordinated interaction refers to the collaborative actions of several companies that yield mutual profits, contingent upon the supportive responses of their competitors In contrast, unilateral effects highlight the potential for a merged entity to independently increase prices, irrespective of the competitive landscape.

A significant concern is that a merged company may unilaterally increase its prices, creating a price "umbrella" effect that allows other market competitors to also raise their prices.

A merger can lead to unilateral effects, especially when the merging firms offer similar or undifferentiated products, resulting in a company with a significant market share The primary factor influencing the likelihood of unilateral effects is the post-merger market share of the combined entity However, it is essential to consider additional factors, such as entry barriers and the excess capacity of other market competitors.

(2) Other theories of unilateral effects, particularly when the merging firms’ products are differentiated rather than homogeneous (discussed below), are more complex 500

Steps in analyzing a horizontal merger

The Merger Guidelines indicate that agencies are not required to adhere to a strict linear method when analyzing horizontal mergers; instead, they can utilize any reliable evidence to evaluate if a merger could significantly reduce competition Despite this flexibility, many courts still prefer the conventional approach of defining relevant markets first.

In an oligopolistic market with limited producers, price leadership emerges as firms adopt interdependent pricing strategies, collectively setting prices at a profit-maximizing, supracompetitive level while acknowledging their mutual economic interests in price and output decisions (FTC v H.J Heinz Co., 2001).

According to the 497 Merger Guidelines § 7, as highlighted in the FTC v Arch Coal, Inc case, the fundamental premise of merger law is that in markets with limited competition, companies can effectively coordinate their actions.

‘either by overt collusion or implicit understanding,’ to restrict output and achieve anticompetitive profits.”)

According to the Merger Guidelines, a merger may lead to unilateral effects if the acquiring company has the motivation to increase prices or diminish quality post-acquisition, regardless of how competitors react This principle was highlighted in the case of United States v H&R Block, Inc., where the court underscored the potential for such outcomes following a merger.

In the context of antitrust law, the analysis of unilateral effects in mergers involving differentiated products is crucial, as highlighted in the case of Evanston Northwestern Healthcare Corp (2007) and further explored in United States v Oracle Corp (2004) Carl Shapiro's work on mergers with differentiated products provides valuable insights into how these mergers can impact market competition and consumer choice.

102 a Step 1—Define the relevant product market

The definition of the relevant market is a crucial initial step in every merger case, as emphasized by the Supreme Court and lower courts According to Section 7, the adverse effects must manifest "in any line of commerce," indicating the need for a relevant product market, and "in any section of the country," which pertains to the relevant geographic market.

In the case of Evanston Nw Healthcare Corp., 503, the FTC indicated that defining the market may not be necessary for consummated mergers when there is direct evidence demonstrating that the merger has led to supracompetitive pricing.

Defining a relevant market is essential for evaluating a merger's impact on competition; however, it may not be necessary if the plaintiff can demonstrate the merger's anticompetitive effects directly, such as through evidence of supracompetitive prices following the merger.

Proof that a merged firm can raise prices post-merger suggests that the relevant market may consist solely of the merging firms This concept, known as the "smallest market principle," indicates that the relevant market encompasses only those firms that would limit the merged firm's ability to exercise market power by providing alternatives for customers if prices were raised anticompetitively If evidence demonstrates that the merged firm can indeed increase prices without facing constraints from other firms, it implies that the relevant market is confined to just the merging entities.

(b) The Guidelines state that “[i]n any merger enforcement action, the Agencies will normally identify one or more relevant markets.” 506 FTC officials have confirmed

502 E.g., United States v Marine Bancorp., 418 U.S 602 (1974); St Alphonsus Med Ctr v St Luke’s Health Sys.,

In various court cases, such as 778 F.3d 775 (9th Cir 2015) and FTC v Lunbeck, Inc., 650 F.3d 1236 (8th Cir 2011), the Federal Trade Commission (FTC) is tasked with the critical responsibility of defining a relevant market to establish its case This principle is underscored in rulings like City of N.Y v Group Health Inc., 649 F.3d 151 (2d Cir 2011) and FTC v Tenet Health Care Corp., 186 F.3d 1045 (8th Cir 1999), highlighting the importance of market identification in antitrust litigation The ongoing legal discourse is further illustrated by the FTC v Sysco Corp., _ F Supp 3d _, 2015 WL, reinforcing the FTC's role in maintaining competitive market practices.

In order to effectively evaluate the impact of a merger on competition, it is crucial for the FTC to define a credible relevant market, as emphasized in the case FTC v OSF Healthcare Sys, where the court stated that without a well-defined relevant market, assessing the merger's competitive effects becomes impossible.

504 See Merger Guidelines § 4 (“The Agencies’ analysis need not start with market definition.”); § 6.1

(noting that some methods for determining effect on competition do not require market definition)

In the case of Evanston Nw Healthcare Corp., the discussion highlights the importance of competitive effects over strict market definitions, as noted by Commissioner Rosch He suggests that while the FTC may technically need to define a relevant market, a focus on direct evidence of competitive impacts is more crucial This perspective was echoed in the Polypore Int’l, Inc case, reinforcing the idea that direct evidence should guide market relevance in antitrust assessments.

In speeches, it is important to recognize that evidence of anticompetitive effects can indicate that the relevant market may be confined to the merging firms However, courts require a clear definition of the relevant market.

(2) “The first principle of market definition is substitutability 508 The Merger

Guidelines establish the relevant product market by focusing on "demand substitution," which refers to the products and suppliers that consumers would consider if the merged company attempted to increase prices.

The Guidelines utilize the "hypothetical monopolist" approach to define relevant markets, focusing solely on the products offered by the merging parties and their substitutes This method assesses the necessary control a hypothetical monopolist would require to successfully implement and maintain a price increase on these products.

Premerger Notification Requirements

In General

Courts have shown reluctance to implement the per se rule in various contexts, including joint ventures, sports league regulations, educational initiatives, professional and trade associations, and health-care matters that involve medical discretion, such as a hospital's choice to grant clinical privileges to practitioners.

(a) The per se rule applies only to “naked” restraints—i.e., those without plausible efficiencies resulting from, e.g., partial integration or other procompetitive justifications 238

The per se rule is not applicable to ancillary restraints, which are restrictions that could negatively impact competition but are essential for the functioning of a larger, integrated project, like a joint venture These restraints must be reasonably necessary for the efficient operation of the venture.

232 See generally Nitro Distrib., Inc v Alitor Corp., 565 F.3d 417, 422 (8th Cir 2009) (noting that plaintiffs’

“claims of price-fixing and customer allocation agreements are among the ‘most elementary’ violations and are generally subject to a per se analysis”)

233 See, e.g., Texaco, Inc v Dagher, 547 U.S 1 (2006); NCAA v Bd of Regents, 468 U.S 85 (1984); Broadcast

Music, Inc v Columbia Broad Sys., 441 U.S 1 (1979); In re New Energy Corp., 739 F.3d 1077, 1079 (7 th Cir

2014) (“Joint ventures have the potential to improve productivity as well as the potential to affect prices [adversely]; that’s why they are analyzed under the rule of reason.”)

In cases such as Bd of Regents v NCAA, the Supreme Court emphasized the importance of cooperation among sports organizations to maintain competitive integrity, as seen in 468 U.S at 117 Similarly, the Eighth Circuit in Brookins v Int’l Motor Contest Ass’n and the Third Circuit in Race Tires of Am., Inc v Hoosier Racing Tire Corp highlighted that courts often grant sports organizations a level of deference and autonomy in their operations, reflecting a broader understanding of the unique dynamics within the sports industry.

235 See, e.g., Found for Interior Design Educ Research v Savannah Coll of Art & Design, 244 F.3d 521 (6th Cir 2001); United States v Brown Univ., 5 F.3d 658 (3d Cir 1993)

236 See, e.g., FTC v Ind Fed’n of Dentists, 476 U.S 447 (1986)

237 See, e.g., Diaz v Farley, 215 F.3d 1175 (10th Cir 2000)

In the case of Am Needle, Inc v NFL, the Supreme Court highlighted that when competition restraints are crucial for product availability, rigid illegality rules do not apply, necessitating a flexible rule of reason for evaluation Similarly, the Deutscher Tennis Bund v ATP Tour, Inc case reinforces this principle, emphasizing the importance of assessing competitive restraints based on their context rather than adhering to strict legal standards.

In the context of antitrust law, the rule of reason applies to ancillary restraints that are integral to a larger business endeavor, essential for realizing efficiency-enhancing benefits (Major League Baseball Props., Inc v Salvino, Inc., 542 F.3d 290, 337) The First Circuit further clarifies that restraints must be genuinely ancillary to qualify under this rule (Stop & Shop Supermarket Co v Blue Cross & Blue Shield, 373 F.3d 57, 63).

To qualify as an ancillary restraint under the per se rule, two key conditions must be met: first, the parties involved must have integrated their activities in a manner that is likely to generate significant efficiencies; second, the restraint imposed must be deemed "reasonably necessary" to realize those efficiencies.

Under the per se rule in antitrust law, plaintiffs are not required to demonstrate any actual anticompetitive effects of an agreement, as defendants cannot present evidence of procompetitive benefits or neutrality in competition This rule creates a definitive presumption of unreasonableness and illegality, allowing plaintiffs to establish liability simply by proving the existence of the agreement and its categorization under the per se rule As noted by one court, "The per se rule is the trump card of antitrust analysis," enabling plaintiffs to focus solely on the agreement's classification rather than its impact.

Plaintiffs often attempt to categorize their allegations under agreements that fall within the per se rule, while defendants contend that the rule of reason should be the applicable standard.

(1) At the other end of the continuum of standards used to assess whether an agreement “unreasonably” restrains competition is the “rule of reason.”

Courts evaluate the competitive impact of most agreements using the comprehensive rule of reason, which suggests that agreements with potential efficiency benefits are not typically condemned outright without considering their likely outcomes This principle is highlighted in cases like Augusta News Co v Hudson News Co., where it is noted that per se condemnation is generally reserved for "naked" agreements that do not contribute to a broader pro-competitive joint venture.

When assessing whether an agreement is ancillary, courts must evaluate if it was essential to enhance the enterprise and productivity of an underlying arrangement at the time of its creation (D Minn 2010) Relevant case law includes In re ATM Fee Antitrust Litigation, which provides further context on this matter For comprehensive guidance, refer to the Antitrust Guidelines for Collaborations Among Competitors published by the Federal Trade Commission and the U.S Department of Justice.

The rule of reason applies to certain agreements that could be deemed per se illegal, as long as they are essential for realizing procompetitive advantages through an efficiency-enhancing integration of economic activities.

240 E.g., FTC v Superior Court Trial Lawyers Ass’n, 493 U.S 411 (1990); In re Se Milk Antitrust Litig., 739 F.3d

241 E.g., Ariz v Maricopa County Med Soc’y, 457 U.S 332 (1982); In re Cardizem CD Antitrust Litig., 332 F.3d

The per se rule, as outlined in 896, 906 (6th Cir 2003), dictates that the intent behind a restraint, any purported pro-competitive justifications, and the actual impact on competition are irrelevant when determining its legality.

& Shop Supermarket Co., supra, 373 F.3d at 61 (explaining that when the per se rule applies, “liability attaches without need for proof of power, intent, or impact”)

242 United States v Realty Multi-List, Inc., 629 F.2d 1351, 1363 (5th Cir 1980)

53 than the per se standard, applies in assessing the reasonableness of an agreement affecting competition; 243 it “is the presumptive or default standard.” 244

The rule of reason evaluates whether a challenged agreement significantly impacts competition by balancing its procompetitive and anticompetitive effects This analysis determines if the agreement enables the defendants to gain or sustain market power, and if so, it assesses whether the resulting efficiencies or consumer benefits surpass the negative effects on market power.

Rule-of-reason analysis is often a lengthy and costly process, described by one FTC commissioner as the "antitrust equivalent to Chinese water torture." This method can be incredibly detailed and demanding, making it a significant undertaking in antitrust cases.

(5) Courts today, in applying rule-of-reason analysis, use a “burden shifting” framework 248 The Second Circuit explained this approach in Geneva Pharms Tech Corp v

Under the rule of reason in the Sherman Act, plaintiffs must first demonstrate that the defendants' behavior negatively impacts competition in the relevant market If successful, the burden then shifts to the defendants to present evidence of any procompetitive effects of their actions Should the defendants provide such proof, the burden returns to the plaintiffs to show that these competitive benefits could have been achieved through less restrictive alternatives Ultimately, a thorough evaluation of both the positive and negative competitive effects of the agreement is essential.

Specific Exemptions or Lack of Coverage

Non-commercial activity

In the case of Flakebord, a $1.15 million disgorgement was imposed for violating a market-allocation agreement that was established prior to the abandonment of the transaction This highlights the legal implications of premerger information exchange, as discussed in Omnicare, Inc v UnitedHealth Group, Inc and analyzed by Michael C Naughton.

Counseling the Harder Questions, Antitrust, Summer 2006, at 66; William Blumenthal, General Counsel, FTC,

In the realm of antitrust law, significant discussions have emerged regarding the permissible coordination between merging entities prior to the finalization of their merger Notable contributions to this discourse include “The Rhetoric of Gun Jumping,” presented at the Association of Corporate Counsel Annual Antitrust Seminar in 2005, and William Blumenthal's analysis on the scope of such coordination published in the Antitrust Law Journal in 1994 Additionally, Mary Lou Steptoe's remarks from 1994, addressing premerger collaboration, further illuminate the complexities and regulatory considerations that shape the interactions of merging companies before consummation.

For a more in-depth discussion of the premerger notification requirements, see ABA Section of Antitrust Law,

Antitrust Law Developments 394-401 (7th ed 2012)

575 FTC v Phoebe Putney Health Sys., _ U.S _,133 S.Ct 1003, 1010 (2013); FTC v Ticor Title Ins Co., 504 U.S 621 (1992); Union Labor Life Ins Co v Pireno, 458 U.S 119 (1982)

576 See generally Bassett v NCAA, 528 F.3d 426 (6th Cir 2008); Smith v NCAA, 139 F.3d 180 (3d Cir 1998), vacated in part on other grounds, 525 U.S 459 (1999)

119 entities, 577 and it can be difficult in some situations to distinguish commercial from non- commercial activity 578

Federal governmental immunity

government, its agencies, or its agents 579 The immunity can apply to private parties working in conjunction with the federal government 580

State action

a The state-action exemption is one of the two most important antitrust exemptions

The Supreme Court's 1943 decision in Parker v Brown established that the Sherman Act does not restrain state actions or officials acting under state directives This ruling underscores that the Act was not designed to limit the anticompetitive behaviors of states, reflecting a broader principle of federalism Consequently, an antitrust exemption has developed from this interpretation, distinguishing state activities from federal antitrust regulations.

577 E.g., NCAA v Bd of Regents, 468 U.S 85 (1985); Eleven Line, Inc v N Tex Soccer Ass’n, Inc., 213 F.3d 198 (5th Cir 2000); Minn Made Hockey, Inc v Minn Hockey, Inc., 2011-1 Trade Cas (CCH) ả 77,453 (D Minn

578 See, e.g., Agnew v NCAA, 683 F.3d 328, 338 (7 th Cir 2012) (“There is no clear line as to what constitutes a

The term "commerce" has evolved significantly over time, now encompassing a wide range of activities beyond traditional commercial transactions Today, it includes virtually any action from which an individual or entity expects to derive economic benefit.

579 See, e.g., United States Postal Serv v Flamingo Indus (USA), 540 U.S 736, 745 (2004) (explaining that “the United States is not an antitrust ‘person,’ in particular, not a person who can be an antitrust defendant”)

In the case of Byers v Intuit, Inc., the Third Circuit established that a private party can receive immunity for anti-competitive actions if they are in agreement with a government agency, provided that the agency is acting under a clearly defined policy or program and the private party is acting under the agency's direction or consent This principle is supported by similar rulings in McCarthy v Middle Tennessee Membership Corp and Name.Space, Inc v Network Solutions, Inc.

581 E.g., Credit Suisse Secs (USA) v Billing, 551 U.S 264 (2007); Nat’l Gerimedical Hosp & Gerontology Ctr v

582 Parker v Brown, 317 U.S 341, 350-51 (1943); see also Tritent Int’l Corp v Ky., 467 F.3d 547, 554 (6th Cir

2006) (explaining that “[t]he rationale behind Parker immunity is that Congress, in enacting the Sherman Act, evidenced no intent to restrain state behavior”)

120 requirements based on the status of the parties undertaking action that would otherwise violate the antitrust laws:

(1) Sovereign branches of state governments—Actions of the sovereign branches of state governments (the legislature, executive, and judiciary) are absolutely immune under the doctrine without any further analysis 583

(2) Private parties—At the other end of the spectrum, the state-action exemption applies to the conduct of private parties if their challenged conduct meets two requirements:

To successfully challenge a restraint, it must meet two key criteria: it must be a state policy that is "clearly articulated and affirmatively expressed," and it must be actively supervised by the state These criteria are commonly known as the first and second "Midcal prongs," referring respectively to the "clearly articulated" prong and the "active supervision" prong.

To satisfy the “clearly articulated and affirmative expressed as state policy” requirement of the Midcal test, a state does not need to explicitly mandate private parties to engage in specific conduct Instead, it must demonstrate an intention to replace competition with regulation, provide general authorization for the conduct in question, and anticipate potential anticompetitive effects resulting from this authorization.

The active state supervision requirement is designed to guarantee that the actions of private entities align with and advance state policies, rather than serving solely the economic interests of those private parties.

583 Hoover v Ronwin, 466 U.S 558 (1984); Costco Wholesale Corp v Maleng, 514 F.3d 915 (9th Cir 2008); S.C

In the case of State Board of Dentistry v FTC, 455 F.3d 436, 442 (4th Cir 2006), it was established that actions taken by the state legislature or courts are inherently exempt from antitrust laws, highlighting the legal protections afforded to state entities in regulatory matters.

Hosp Corp v W Tenn Hosp Co., 414 F.3d 608 (6th Cir 2005)

584 Cal Retail Liquor Dealers Ass’n v Midcal Aluminum Co., 445 U.S 97, 105 (1980) (stating the general principle)

585 FTC v Phoebe Putney Health Sys., _ U.S _, 133 S.Ct 1003 (2013) (holding that general grants of power by the state to private parties are insufficient); City of Columbia v Omni Outdoor Adver., Inc., 499 U.S 365 (1991);

Town of Hallie City of Eau Claire, 471 U.S 34 (1985); S Motors Carriers Rate Conf., Inc v United States, 471

U.S 48 (1985); Kay Elec Cooperataive v City of Newkirk, 647 F.3d 1039 (10 th Cir 2011); Active Disposal, Inc v

In the case of City of Darien, the court emphasized the need to examine state statutes to determine if they permit the contested actions and if any anti-competitive consequences are expected outcomes of such authorization (635 F.3d 883, 888, 7th Cir 2011) Similarly, in Danner Construction Co v Hillsborough County, it was noted that direct statements from the state legislature regarding anticipated anti-competitive effects are not necessary for a legal evaluation (608 F.3d 809, 813, 11th Cir 2010) These cases highlight the importance of understanding legislative intent and the implications of state authorizations on market competition.

The Supreme Court has not mandated explicit approval for specific anticompetitive actions, as demonstrated in Travel & Tourism Comm’n, 626 F.3d 1079 (9th Cir 2010), where state action immunity was applied when actions were a predictable outcome of broad statutory authorization This principle is further supported by the case Lafaro v N.Y Cardiothoracic Group, PLLC, 570 F.3d 471 (2d Cir 2009).

In the case of FTC v Ticor Title Ins Co., the Supreme Court emphasized the necessity of adequate state supervision to prevent private parties from prioritizing their own interests over those of the state This principle was further highlighted in the Cal Travel & Tourism Comm’n case, which underscored the importance of active supervision in maintaining a fair and balanced regulatory environment.

121 sustain the requirement, the state must have and exercise the power to review and approve or disapprove the private parties’ challenged conduct 587

If a government entity's actions are deemed exempt, private parties involved in conjunction with those actions typically receive the same exemption This prevents plaintiffs from undermining state programs by targeting private parties while leaving the state itself unchallenged.

State agencies and local governments, such as cities and counties, act as subordinate entities to the sovereign state The state-action exemption applies to these entities when their actions are clearly defined and expressed as state policy, aligning with the first Midcal prong Unlike private parties, these entities do not require active state supervision for the exemption to be valid, except in cases where state agencies consist of competing professionals, like state regulatory boards.

(4) Although exemptions from the antitrust laws are generally disfavored, “the case law has interpreted [state-action] protection hospitably” 592 —at least until recently 593

587 Patrick v Burget, 486 U.S 94 (1988); see also Ticor, supra; Trigon Okla City Energy Corp v Okla Gas &

588 E.g., N.Y Cardiothoracic Group, supra; Elec Inspectors, Inc v Village of E Hills, 320 F.3d 110 (2d Cir 2003); Earles v State Bd of Certified Pub Accountants, 139 F.3d 1033 (5th Cir 1998)

589 Phoebe Putney Health Sys., supra; Town of Hallie, supra; City of Columbia, supra; United Nat’l Main., Inc v

In the context of state action immunity, municipalities share the state's immunity when implementing anticompetitive policies authorized by the state, as established in cases such as San Diego Convention Center, 749 F.3d 869 (9th Cir 2014) and Kay Electric Cooperative, 647 F.3d at 1042 To qualify for this immunity, a local governmental entity must demonstrate that it is a political subdivision of the state, that the state has authorized it to perform the contested action through statutes, and that there is a clearly articulated state policy permitting anticompetitive conduct, as highlighted in FTC v Hospital Board, 38 F.3d 1184 (11th Cir 1994).

In the case of N.C State Bd of Dental Examiners v FTC, the Fourth Circuit Court affirmed the FTC's ruling that a state regulatory board, made up of professionals who compete in the market and are elected by those they regulate, is considered a private entity Consequently, for the board's actions to qualify for an exemption, they must be actively supervised by the state.

In the case of N.C State Bd of Dental Examiners v FTC, the U.S Supreme Court ruled that the state-action exemption was not applicable to the board's anticompetitive behaviors, emphasizing the necessity for active state supervision since the board consisted of practicing dentists Additionally, the case of Teledoc, Inc v Tex Med Bd further illustrates the importance of regulatory oversight in maintaining fair competition within the healthcare sector.

592 Rectrix Aerodome Ctrs., Inc v Barnstable Mun Airport Comm’n, 610 F.3d 8, 13 (1st Cir 2010)

593 See, e.g., Phoebe Putney Health Sys., supra; N.C State Bd of Dental Examiners, supra (affirming the FTC’s decision refusing to apply the exemption to the actions of a state-agency regulatory board)

Sherman Act preemption

States cannot simply allow private entities to conduct activities that breach antitrust laws When state regulations require private parties to engage in actions that inherently violate Section 1 of the Sherman Act, the federal law takes precedence over state regulations.

(1) State regulation may be preempted on its face or as applied in particular situations 595

(2) Even where the Sherman Act preempts state regulation, the defendants may still be protected from liability by the state-action exemption 596

6 Soliciting anticompetitive governmental action—the “Noerr-Pennington” exemption a Perhaps the broadest and most important of the antitrust exemptions is that provided to parties petitioning the government to take anticompetitive action, commonly called the “Noerr-Pennington” or “Noerr” exemption after the two seminal Supreme Court decisions establishing the exemption 597 Succinctly stated, the antitrust laws do not apply to private parties’ petitioning the government for anticompetitive action

(1) Thus, as one court explained, in determining liability, “we must first identify any conduct that is immunized [by Noerr] After we do so, we consider the evidence of the

594 Rice v Norman Williams Co., 458 U.S 654 (1982); see also Fisher v City of Berkeley, 475 U.S 260 (1986);

Yakima Valley Mem’l Hosp v Wash Dep’t of Health, 654 F.3d 919 (9 th Cir 2011); Freedom Holdings, Inc v

Cuomo, 624 F.3d 38, 49-50 (2d Cir 2010) (explaining that “the party asserting preemption must demonstrate an

The article discusses the concept of an "irreconcilable conflict" between a challenged state statute and the Sherman Act, emphasizing that such a conflict arises only when the actions permitted by the statute are inherently a per se violation of antitrust laws in every instance.

Flying J, Inc v Van Hollen, 621 F.3d 658 (7th Cir 2010); Sanders v Brown, 504 F.3d 903, 910 (9th Cir 2007)

The Supreme Court asserts that a conflict arises only when the state either mandates or authorizes actions that inevitably lead to a violation of the law in every instance, or when it exerts overwhelming pressure on a private entity to breach those laws.

595 E.g., Danner Constr Co., supra (Martin, J., concurring)

Even if a state law or municipal ordinance is preempted by the Sherman Act, courts must perform the Parker/Midcal inquiry to assess if the defendant qualifies for immunity, as established in Danner Construction Co., 608 F.3d at 815 This principle is supported by additional cases such as Freedom Holding and Flying J.

597 E R.R Presidents Conf v Noerr Motor Freight, Inc., 365 U.S 127 (1961); UMW v Pennington, 381 U.S 657 (1965); see also Kaiser Found Health Plan v Abbott Labs., 552 F.3d 1033, 1044 (9th Cir 2009) (“The Noerr-

The Pennington doctrine protects private citizens' First Amendment rights to petition the government without the risk of antitrust liability According to the ruling in Andrx Pharms., Inc v Elan Corp., defendants are immune from Sherman Act liability when they engage in coordinated efforts to advocate for legislation that may restrain or monopolize trade to their advantage.

123 remaining challenged conduct in the aggregate to see if it is sufficient to support antitrust liability.” 598

(2) The doctrine rests on both First Amendment considerations protecting governmental petitioning activities and on statutory interpretation—that Congress did not intend the antitrust laws to apply to political activity 599

Due to its First Amendment basis, most courts recognize that the exemption extends to various federal and state legal claims, not limited to federal antitrust issues This exemption encompasses petitioning at all levels of government—local, state, and federal—and applies regardless of whether the petitioning is a result of collective actions or individual efforts Additionally, the exemption remains valid irrespective of the petitioners' anticompetitive motives Generally, it applies when petitioners are earnestly seeking governmental action—be it legislative, judicial, or executive—and any anticompetitive effects arise from that governmental response, unless the conduct is merely incidental to the petitioning However, if the restraint stems directly from the petitioning activities rather than the sought governmental action, the exemption does not apply.

598 Mercatus Group, LLC v Lake Forest Hosp., 641 F.3d 834, 839 (7th Cir 2011)

599 Id at 846 (“ Noerr-Pennington was crafted to protect the freedom to petition guaranteed under the First

Amendment.”); Sosa v DIRECTV, Inc., 437 F.3d 923 (9th Cir 2006); Armstrong Surgical Ctr v Armstrong County

600 E.g., BE&K Constr Co v NLRB, 536 U.S 516 (2002) (applying the exemption in the labor-law context);

The Noerr-Pennington doctrine, originally rooted in antitrust law, has evolved to encompass the First Amendment's speech and petitioning rights, as noted in Mercatus Group, 641 F.3d at 847 This legal principle also extends to tortious interference and federal civil rights claims, as highlighted in Campbell v PMI Food Equipment Group, Inc., 509 F.3d 776 (6th Cir 2007), and further affirmed in Sanders v Brown, 504 F.3d 903 (9th Cir.).

2007) (explaining that the exemption applies to state antitrust claims); Cheminor Drugs, Ltd v Ethyl Corp., 168 F.3d 119 (3d Cir 1999) (explaining that the exemption applies to state tortious-interference and unfair-competition claims)

601 See BE&K Constr Co., supra; Cal Motor Transp Co v Trucking Unlimited, 404 U.S 508 (1972); Mercatus

Group, supra; Andrx Pharms., supra; A.D Bedell Wholesale Co v Philip Morris, Inc., 263 F.3d 239 (3d Cir 2001); Kottle v Nw Kidney Ctrs., 146 F.3d 1056 (9th Cir 1998)

In legal contexts, the motives behind a petitioner's actions are often deemed irrelevant, as established in several court cases For instance, the Supreme Court in 602 City of Columbia v Omni Outdoor Advertising, Inc emphasized that a petitioner's selfish motives do not impact the legal assessment Similarly, the Ninth Circuit in Sanders v Brown highlighted that determining liability based on a petitioner's anticompetitive motives could suppress free speech Furthermore, the Tenth Circuit in Tal v Hogan reiterated that the actual intent of both the petitioners and government agents involved is not a relevant factor in legal evaluations.

603 City of Columbia, supra; In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187 (2d Cir 2006); Sandy River

Nursing Care v Aetna Cas., 985 F.2d 1138 (1st Cir 1993)

The exemption under the Noerr-Pennington doctrine extends to conduct that is incidental to government petitioning, even if it negatively impacts competition However, this exemption does not cover attempts to coerce government action, such as through boycotts A significant exception to this immunity is the "sham exception," which the Supreme Court has defined as petitioning that is insincere or fraudulent in nature.

Individuals may exploit the governmental process as an anticompetitive tool, focusing on the process rather than its outcomes This occurs when petitioners engage in actions not aimed at securing favorable government decisions but rather at directly harming their competitors While the exact nature of sham petitioning remains ambiguous, courts have identified certain activities as being sham in nature.

(1) Fraud on the patent office in obtaining a patent and subsequent attempted enforcement of the patent in infringement litigation 607

Misrepresentations or fraud during the petitioning process can potentially invalidate exemptions, but the specific circumstances under which this occurs remain ambiguous The Supreme Court has not provided definitive guidance on these issues, leaving important questions unanswered.

(a) A number of courts have held that misrepresentations in the petitioning

Influencing legislation through public campaigns can inadvertently harm the interests of opposing parties, as highlighted in Noerr, 365 U.S at 143 The Mercatus Group case, 641 F.3d at 849, further illustrates that a public relations campaign, even if it results in unrelated injuries to competitors, retains its protective status This principle is supported by the ruling in Allied Tube & Conduit Corp v Indian.

Head, Inc., 486 U.S 492 (1988); Freeman v Lasky,Haas & Cohler, 410 F.3d 1180 (9th Cir 2005)

605 E.g., Allied Tube & Conduit, supra; Superior Court Trial Lawyers Ass’n, 107 F.T.C 510 (1986); Mich State

606 City of Columbia, supra, 499 U.S at 380; see also Kaiser Found Health Plan v Abbott Labs., Inc., 552 F.3d

1033 (9th Cir 2009); Knology, Inc v Insight Commc’ns Co., 393 F.3d 656 (6th Cir 2004)

607 In re Independent Serv Orgs Antitrust Litig., 203 F.3d 1322 (Fed Cir 2000); Glass Equip Dev., Inc v Besten,

Inc., 174 F.3d 1337 (Fed Cir 1999); Nobelpharma AB v Implant Innovations, Inc., 141 F.3d 1059 (Fed Cir 1998); Ritz Camera & Image, LLC v Sandisk Corp., 772 F Supp 2d 1100 (N.D Cal 2011)

608 Cal Motor Transp., supra; Armstrong Surgical Ctr., supra

609 See Prof’l Real Estate Investors, Inc v Columbia Pictures Indus., 508 U.S 49, 62 n.6 (1993)

125 process are tolerated in the legislative context, but not in adjudicatory contexts (judicial or administrative) 610

Some legal decisions suggest that misrepresentations may be protected in adjudicatory contexts, particularly when petitioners intend to secure governmental action However, certain courts adopt a balanced approach, determining the protection based on factors like the severity of the misrepresentation and its impact on the legitimacy of the adjudication.

Fraudulent misrepresentations can potentially undermine petitioning activities, but not all instances of fraud during adjudicative or administrative proceedings lead to antitrust liability Specifically, inadvertent misrepresentations or those that do not impact the proceedings are not covered by the fraud exception For a misrepresentation to categorize an adjudicative proceeding as a sham, it must meet two criteria: it must be intentionally made with knowledge of its falsity, and it must be material enough to have altered the outcome of the proceeding.

(c) And the fraud exception does not apply in contexts other than adjudicative proceedings, although determining whether an administrative proceeding is legislative or adjudicatory is not always simple 615

(4) Enforcement of a patent that plaintiff knows is invalid because, for example, it was obtained by fraud on the patent office 616

610 E.g., Cal Motor Transp., supra; Mercatus Group, supra (extended discussion of the “fraud branch” of the sham exception); A Fisherman’s Best, Inc v Recreational Fishing Alliance, 310 F.3d 183 (4th Cir 2002); Potters Med

Ctr v City Hosp Ass’n, 800 F.2d 568 (6th Cir 1986); St Joseph’s Hosp v Hosp Corp of Am., 795 F.2d 948 (11th

612 Freeman v Lasky, Hass & Cohler, supra; Cheminor Drugs, Ltd v Ethyl Corp., 168 F.3d 119 (3d Cir 1999);

Kottle, supra; Union Oil Co., 138 F.T.C 1 (2004) (providing an extended discussion of the FTC’s view about the scope of the exemption)

614 Id at 843; see also Baltimore Scrap Corp v David J Joseph Co., 237 F.3d 394, 402 (4 th Cir 2001)

(misrepresentations must be material and be “the type of fraud that deprives the litigation of its legitimacy”); Kottle, supra

616 Walker Process Equip Co v Food Mach & Chem Corp., 382 U.S 172 (1965); Nobelpharma, supra; In re

DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677, 691 (2d Cir 2009)

(5) Sham litigation—The filing of suits, even if for an anticompetitive purpose, is usually protected by the exemption 617

(a) There is, however, a narrow “sham litigation” exception In Professional

Real Estate Investors, Inc v Columbia Pictures Industries, the Supreme Court established a two-part test for identifying sham litigation:

Business of insurance

The McCarran-Ferguson Act provides a limited exemption specifically for the "business of insurance," rather than for insurance companies themselves This means that not all activities conducted by insurance companies are exempt, and non-insurance companies can also qualify for this exemption if their activities are considered part of the "business of insurance." For the exemption to be applicable, certain criteria must be met.

(1) First, the challenged conduct must constitute, or be part of, the “business of insurance.” Conduct constitutes the “business of insurance” if:

(a) It spreads or transfers risk;

(b) It is an integral part of the relationship between the insurer and its insureds; and

(c) It involves only firms within the insurance industry 634

(2) Second, the business of insurance must be regulated by the state 635 Even the most general state regulation of insurance seems sufficient, however, and it need not even be enforced 636

The conduct in question must not involve any form of agreement to boycott, coerce, or intimidate Under the McCarran Act, these actions are defined as a refusal to engage in dealings aimed at pressuring the target into complying with specific demands through a refusal to transact in unrelated matters.

633 In re Ins Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir 2010); Hartford Fire Ins Co v Cal., 509 U.S 764 (1993); Arroyo-Melecio v Puerto Rican Am Ins Co., 398 F.3d 56 (1st Cir 2005)

634 See generally Union Life Ins Co v Pireno, 458 U.S 119 (1982); Group Life & Health Ins Co v Royal Drug

Co., 440 U.S 205 (1979); Katz v Fid Nat’l Title Ins Co., 685 F.3d 588 (6 th Cir 2012); Ins Brokerage Antitrust

Litig., supra; Arroyo-Melecio, supra; Gilchrist v State Farm Mut Auto Ins Co., 390 F.3d 1327 (11th Cir 2004)

635 See, e.g., FTC v Travelers Health Ass’n, 362 U.S 293 (1960)

636 FTC v Nat’l Cas Co., 357 U.S 560 (1958); Arroyo-Melecio, supra; Ocean State Physicians Health Plan v Blue

Cross & Blue Shield, 883 F.2d 1101 (1st Cir 1989)

130 transactions.’” 638 Thus, the definition of “boycott” for purposes of the McCarran Act is narrower than that of “group boycott” for purposes of Section 1 of the Sherman Act.

Local Government Antitrust Act

The Local Government Antitrust Act, 639, provides an antitrust exemption from damages (not liability) for all local governmental units, which includes a broad definition encompassing cities, towns, counties, and various special-function districts like water and school districts This exemption extends to individuals associated with the local government, regardless of their employment status, when their actions are based on official local government directives Additionally, any local government official or employee acting within their official capacity is covered, with the stipulation that their actions must be authorized and supervised by the local government, eliminating the need for state authorization for state-action exemption protection Importantly, the motives of the defendants are deemed irrelevant, and the Act does not prevent plaintiffs from seeking declaratory judgments or injunctions.

In the case of 638 Arroyo-Melecio, the court highlighted the significance of coercive practices in transactions, referencing Hartford Fire Ins Co v California and Gilchrist to illustrate that such practices may involve a refusal to engage in collateral transactions to manipulate terms of a primary transaction This principle was further supported by the ruling in Slagle v ITT Hartford, emphasizing the legal implications of these coercive tactics in contractual agreements.

642 Wee Care Child Center, Inc v Lumpkin, 680 F.3d 841 (6 th Cir 2012); GF Gaming Corp v City of Black Hawk,

405 F.3d 876 (10th Cir 2005); Sandcrest Outpatient Servs., P.A v Cumberland County Hosp Sys., Inc., 853 F.2d

643 Montauk-Caribbean Airways, Inc v Hope, 784 F.2d 91 (2d Cir 1986)

644 Wee Care Child Center, supra; GF Gaming, supra; Cohn v Bond, 953 F.2d 154 (4th Cir 1991)

645 E.g., Swarz Ambulance Serv., Inc v Genesee County, 666 F Supp 2d 721 (E.D Mich 2009); Bean v Norman, 2010-2 Trade Cas (CCH) ả 76,887 (D Kan 2010)

Health Care Quality Improvement Act

The Health Care Quality Improvement Act (HCQIA) provides an exemption from damages for hospitals and their medical staff during peer-review proceedings that affect physicians' staff privileges This legislation emerged in response to numerous antitrust lawsuits filed by physicians in the late 1970s and 1980s, particularly following the Supreme Court's decision in Patrick v Burget, which ruled that private hospitals were not shielded from antitrust liability without state supervision The HCQIA primarily protects hospitals from damages related to credentialing actions against physicians, but it does not extend to other healthcare providers or to decisions based on factors unrelated to professional competence or conduct Additionally, the HCQIA's exemption covers all legal challenges, excluding civil rights cases and those initiated by government entities.

“professional review bodies” in the course of “professional review activities” taken with respect

647 See generally 2 John J Miles, Health Care & Antitrust Law, Ch 10 (2015)

649 See, e.g., Liu v Bd of Trustees, 330 Fed App’x 775 (11th Cir 2009) (explaining the purpose for the HCQIA)

The exemption outlined in the HCQIA applies to physicians, professional review bodies, their staff, and contracted individuals involved in the professional review process This exemption is valid when the professional review action is properly executed.

(1) With the reasonable belief that it would further quality health care;

(2) After a reasonable effort to obtain the relevant facts;

(3) After adequate notice and hearing procedures for the affected physician; and

In evaluating whether a professional review action is justified, courts utilize an objective standard, disregarding the reviewers' motives or biases The correctness of the reviewers' conclusions regarding a physician's competence is not a prerequisite for the exemption to apply The Health Care Quality Improvement Act (HCQIA) creates a rebuttable presumption that the professional review action satisfies the necessary criteria, placing the onus on the adversely affected physician to provide sufficient evidence to counter this presumption.

652 See id § 11151; Cohlmia v St John’s Med Ctr., 693 F.3d 1269 (10 th Cir 2012); Moore v Williamsburg Reg’l

654 See, e.g., Cohlmia, supra; Wahi v Charleston Area Med Ctr., 562 F.3d 599 (4th Cir 2009)

In the case of Poliner v Texas Health System, the court ruled that the plaintiff's claims of alleged bad motives or ill intent from hospital officials were insufficient to support his case, emphasizing that personal grievances do not provide a valid legal basis This precedent highlights the importance of substantiating claims with concrete evidence rather than relying on perceived animosity.

656 Poliner, supra, 537 F.3d at 378 (the HCQIA “does [not] require that the conclusions reached by the reviewers were in fact correct”); Brader v Allegheny Gen Hosp., 167 F.3d 840 (3d Cir 1999)

658 E.g., Gordon v Lewistown Hosp., 423 F.3d 184, 202 (3d Cir 2005) (explaining that “[t]he HCQIA places a high burden on physicians to demonstrate that a professional review action should not be afforded immunity,” creating

In summary judgment cases, the plaintiff faces a significant challenge, as they must demonstrate that the professional review process was unreasonable and failed to meet the immunity standard This principle is illustrated in the case of Johnson v Christus.

Spohn, 334 Fed App’x 673 (10th Cir 2009) (per curiam); Poliner, supra; Myers v Columbia/HCA Healthcare Corp., 341 F.3d 461 (6th Cir 2003)

Most courts determine the applicability of the exemption as a legal question, typically resolved during summary judgment If the professional review action aligns with established standards, and the defendants significantly succeed in the affected physician's subsequent lawsuit, the exemption remains valid.

“frivolous, unreasonable, without foundation, or in bad faith,” the HCQIA provides that the court

Courts are often hesitant to grant defendants their attorneys' fees and costs, despite the HCQIA being an exemption statute that does not provide a private right of action for damages related to non-compliance with professional review action requirements.

659 E.g., Bryan v James E Holmes Reg’l Med Ctr., 33 F.3d 1318 (11th Cir 1994)

661 See Stratienko v Chattanooga-Hamilton County Hosp Auth., 2009 WL 2168717 (E.D Tenn., Jul., 16, 2009);

Gordon v Lewistown Hosp., 2006-2 Trade Cas (CCH) ả 75,454 (M.D Pa 2006) But cf Cohlmia v St John Med Ctr., 906 F Supp 2d 1188 (N.D.Okla 2012) (awarding defendants $732, 558 in attorneys fees)

662 See Rowell v Valleycare Health Sys., 2010 WL 4236797 (N.D Cal 2010) (citing cases); Stratienko, supra;

Gordon v Lewistown Hosp., 2006-2 Trade Cas (CCH) ả 75,454 (M.D Pa 2006)

FEDERAL AGENCY ANTITRUST GUIDANCE MATERIALS

1 Federal Trade Comm’n & U.S Dep’t of Justice, Statement of Antitrust Enforcement

Policy Regarding Accountable Care Organizations Participating in the Medicare Shared

Savings Program (2011), available at http://www.ftc.gov/os/fedreg/2011/10/111020aco.pdf

2 U.S Dep’t of Justice & Federal Trade Comm’n, Statements of Antitrust Enforcement

Policy in Health Care (1996), available at http://www.justice.gov/atr/statements-antitrust- enforcement-policy-health-care

3 Federal Trade Comm’n & U.S Dep’t of Justice, Improving Health Care: A Dose of

Competition (2004), available at http://www.justice.gov/atr/improving-health-care-dose- competition-report-federal-trade-commission-and-department-justice

4 Numerous FTC Staff Advisory Opinions, available at http://www.ftc.gov/policy/advisory-opinions

5 Numerous Antitrust Division Business Review Letters, available at http://www.justice.gov/atr/public/busrev/letters.html#page=page-1

6 Numerous speeches by FTC and Antitrust Division representatives, available at 5 & 6 John J Miles, Health Care & Antitrust Law (2013)

B Other more general helpful federal antitrust agency antitrust guidance:

1 U.S Dep’t of Justice & Federal Trade Commission, Horizontal Merger Guidelines

(2010), available at http://www.ftc.gov/sites/default/files/attachments/merger- review/100819hmg.pdf

2 Federal Trade Comm’n & U.S Dep’t of Justice, Antitrust Guidelines for

Collaborations Among Competitors (2000), available at https://www.ftc.gov/public- statements/2000/04/policy-statement-ftc-doj-issue-antitrust-guidelines-collaborations-among

RECOMMENDED ANTITRUST AND ANTITRUST ECONOMICS RESOURCES

1 1-2 American Bar Association Section of Antitrust Law, Antitrust Law Developments (7th ed 2012)

2 1-14 Phillip E Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust

Principles and Their Application (various years of publication)

3 Phillip E Areeda & Herbert Hovenkamp, Fundamentals of Antitrust Law (4th ed 2011)

4 Roger D Blair & David L Kaserman, Antitrust Economics (2d ed 2009)

5 Roger D Blair & Jeffrey L Harrison, Monopsony in Law and Economics (2010)

6 Robert H Bork, The Antitrust Paradox (1978)

7 Dennis W Carlton & Jeffrey M Perloff, Modern Industrial Organization (4th ed 2005)

8 Federal Trade Commission web site—www.ftc.gov

9 Herbert Hovenkamp, Federal Antitrust Policy: The Law of Competition and its Practice (5th ed 2016)

10 1-6 John J Miles, Health Care & Antitrust Law, Vol 1 (Supp 2016)

11 Robert S Pindyck & Daniel L Rubinfeld, Microeconomics (6th ed 2005)

12 Richard A Posner, Antitrust Law (2d ed 2001)

11 E Thomas Sullivan & Jeffrey L Harrison, Understanding Antitrust and Its Economic

12 United States Department of Justice, Antitrust Division web site—www.justice.gov/atr

Prepared Statement of the Federal Trade Commission

Before the United States Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights

“Oversight of the Enforcement of the Antitrust Laws”

Chairwoman Edith Ramirez of the Federal Trade Commission expresses gratitude to Chairman Lee, Ranking Member Klobuchar, and the Subcommittee members for the opportunity to testify She aims to discuss the Commission's current competition enforcement activities and priorities.

Competitive markets are essential for a thriving economy, delivering lower prices, increased innovation, and diverse product choices for consumers Effective antitrust enforcement is crucial in maintaining the integrity of these markets, benefiting both consumers and businesses The Supreme Court's recent ruling in North Carolina State Board of Dental Examiners v FTC underscores the importance of federal antitrust law as a key protector of the nation's free market system.

For over a century, the FTC has been dedicated to maintaining open and dynamic American markets by enforcing antitrust laws to protect consumers Its efforts prevent anticompetitive mergers and practices in key economic sectors Additionally, the FTC leverages its authority to analyze industry trends, pinpoint threats to consumer welfare, and promote pro-consumer policies to policymakers at all levels, ensuring that federal antitrust enforcement effectively serves the interests of consumers.

This statement reflects the Federal Trade Commission's views, while my oral presentation and responses are personal and may not align with the Commission or other Commissioners' perspectives.

2 North Carolina St Bd of Dental Exam’rs v FTC, 135 S Ct 1101, 1109 (2015) (“N.C Dental”)

This testimony highlights a number of recent FTC enforcement matters, including notable successes stopping anticompetitive mergers and conduct, as well as competition research and advocacy both domestically and abroad

The Commission aims to enhance competition by employing a detailed, evidence-based approach to law enforcement With jurisdiction over various economic sectors, the FTC prioritizes enforcement in areas that significantly impact consumers, including health care, consumer products, technology, manufacturing, and energy The agency collaborates with the Department of Justice to enforce antitrust laws effectively, ensuring robust merger enforcement to maintain competitive markets.

The agency's key role is to prevent mergers that could significantly reduce competition Premerger filings under the Hart-Scott-Rodino Act have surged, increasing by 32% in FY 2015 compared to FY 2013, and more than doubling since the recession's low point Notably, over 96% of reported transactions in the past five years have been approved during the initial HSR waiting period, indicating that only a small percentage require further scrutiny for potential violations of Section 7 of the Clayton Act In 2015, the Commission took action against 27 mergers that were likely to be anticompetitive based on the evidence presented.

While most of these enforcement actions resulted in negotiated settlements that are designed to preserve competition in the affected markets, the Commission filed suit to block six

3 In FY 2015, the Agencies received notice of 1,801 transactions, compared with 1,326 in FY 2013 and 716 in FY

The Commission is actively engaged in merger litigation, with three transactions currently under review and four pending This indicates a strong commitment to challenging mergers that may diminish competition, leading to increased prices, lower quality, or decreased innovation In several instances, proposed remedies from the merging parties were deemed insufficient by the Commission to maintain competitive market conditions.

For example, last June, the FTC, along with 11 states and the District of Columbia, 5 secured a significant victory by successfully blocking the proposed merger between Sysco and

A federal district court in Washington, DC, ruled against the proposed acquisition of US Foods, determining it would likely violate Section 7 of the Clayton Act by significantly reducing competition in both national and 32 local broadline foodservice distribution markets This decision aimed to prevent potential increases in prices and declines in quality for foodservice customers, including restaurants, hotels, hospitals, and schools Despite the parties suggesting a remedy, the court and the Commission rejected it, leading to the abandonment of the deal and the preservation of healthy competition in the industry.