***ANTITRUST*** Intro.

Antitrust is a body of law to prevent businesses them from hurting free market; the study of competition; seeks to ensure competitive markets through the interaction of sellers & buyers in the dynamic process of exchange (ex an agreement not to compete would mean each producer would be less concerned about responding to consumers needs) Economics Review supply and demand curve (supply slopes up and demand slopes down) - income effect = more people can afford something when the price is low - price ceiling = when gov says you cannot charge more than X for something - price floor = putting a min limit on the price of something (min wage in labor market) -2 basic assumptions: (1) indiv make decisions based on self interest; (2) the aggregate of these max wealth in society; throw in bonus awesomeness Antitrust Injury and Causation: Generally (1) the were in fact injured as a result of s violation of the antitrust laws (aka injury in fact or fact of damage); (2) that s illegal conduct was a material cause of s injury and; (3) that s injury is an injury of the type that the antitrust laws were intended to prevent; also must show act was the material cause of s injury (Just like in torts, must show actual damages AND causation) ***HORIZONTAL RESTRAINTS*** collaboration among competitors; companies are always self-interested; example- PRICE FIXING (per se illegal under Sherman Act) *** See WYPADKI 5 for notes on price fixing*** Sherman Act 15 U.S.C. 1: every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal The way to attack horizontal restraints: (1) what is the specific restraint at issue?; (2) what are its likely anticomp. Effects?; (3) are there offsetting procomp. Justifications?; (4) do the parties have sufficient market pwr to make a diff? Black Letter Law and S.Act 1: Usual S.Act 1 case: bears the burden of est. a precompetitive justification; ex.) there are high barriers to entry for new dentists b/c education is very expensive = more market power is exerted by those already established in the business How to Violate 2 of Sherman Act (1) section 2 violation if monopoly power AND a section 1 violation to retain that; (2) Griffith case - 2 violated if (a) the power to exclude competition and (b) either (i) exercised or (ii) purpose to exercise; (3) 2 violation if monopoly power and you do business; this third one would not work because it would seem that every time you invent something new you would have a monopoly 2 VIOLATION: TWO OFFENCES: deals with acts of individual terms (1) Monopolization- (a) Need the monopolizing (some conduct that is attempting to exclude competition and maintain or further the monopoly) (b) Monopoly power (have to have some big chunk of the market) (2) Attempted Monopolization - you do not need monopoly power (not a requirement to be found guilty of it) ***MONOPOLY*** requires:(1) MARKET POWER; (2) EXCLUSIONARY CONDUCT - exclusionary conduct is getting, growing or keeping the monopoly; Some intent is required, but it can be inferred from actions; A purposeful act is required, but no need to show specific intent to monopolize; "Moral wrong" is not required. (United Shoe); But malicious intent can be evidence of the exclusionary nature of the conduct. (Microsoft) - Must look to economic realities of the situation; Must be injury to competition. Injury to competitors is not enough; Charging monopoly prices is not exclusionary conduct! (In fact, it's often the opposite.); must harm competition, not just the competitors! (b/c Antitrust looks out for the consumers and not the firms) MONOPOLY PWR DOES NOT MEAN MONOPOLIZATION ***Elements of Monopolization: (1) that the alleged market is a valid relevant market; (2) that possessed monopoly power in that market; (3) that willfully acquired or maintained monopoly power in that market by engaging in anticompetitive conduct; (4) that s conduct occurred in or affected interstate commerce and (5) that s suffered antitrust injuries in their business or property b/c of s anticompetitive conduct

Injunctive remedies: Courts have broad powers ... Can refashion contracts and eliminate restrictions (United Shoe) Can order break-up of company (AT&T, American Tobacco, Standard Oil) Can order defendant to deal (Otter Tail, Aspen Skiing) - with monopoly power, your main goals (as ) are: (1) make the market seem larger ( would make it want to seem smaller); (2) show that their share of the market is smaller; (3) show a lack of barriers to entry ***Attempt to Monopolize Requires: (1) Specific intent; (2) Exclusionary conduct (predatory or anticompetitive conduct directed at monopolization); (3) Dangerous probability of success (not reqed for conspiracy) Attempt to Monopolize Analysis- In determining whether there was a dangerous probability that D would acquire the ability to control price and exclude competition in a relevant market, you should consider such factors as: Ds market share; trend in Ds market share; whether the barriers to entry into the market made it difficult for competitors to enter the market; Likely effect of any anticompetitive conduct on Ds share of the market. Look at these factors to determine if there was a dangerous probability the defendant would ultimately acquire monopoly power. Dangerous possibility of success need not mean that success was nearly certain, but it does mean that there was a substantial and real likelihood that defendant would ultimately acquire monopoly power. ***Conspiracy to Monopolize Requires: (1) Existence of conspiracy btwn two or more; (2) Specific intent to monopolize some part of trade or commerce; (3) An over act in furtherance of the conspiracy; (4) Causal Antitrust injury ***VERTICAL RESTRAINTS*** agreements btwn firms at diff levels in the production or distribution chain; also are subject to scrutiny under antitrust laws; less likely to be inherently anticompetitive; gen. are limitations placed on retailer activities by the manufacturer or distrib; also includes efforts by a seller to limit a buyers purchases from sellers of competing brands ***PRICE DISCRIMINATION*** - Clayton Act; Robinson-Patman Act (RP Act) - 2(a) of RP Act makes it illegal for someone to disc. in price (amazon and buying history ex.) ***See WYPADKI 20-21 for more on Robinson-P Act*** - Under Clayton Act 3: Subject to rule-of-reason scrutiny if: (1) Seller has market power in tying product, or (2) A substantial amount of commerce is affected; exclusive dealings - Under Sherman Act 1: Subject to per-se illegality if: (1) Seller has market power in tying product, and (2) A substantial amount of commerce is affected. ***INTELLECTUAL PROPERTY*** (1)copyright; (2)trademark; (3)patent; (4)trade secret PATENTS have to be: New; Useful; Eligible subject matter; Non-obvious (wow factor); Disclosed; Smthg that you invented; biggest hurdle is being new and non-obvious; last 20 yrs from date of application; usually obviousness bars people from getting a patent on a recipe ; cant be smthg you found, has to be invented; PATENT POOLS when ppl get together and agree to use each others patents TRADE SECRET smthg that is secret and is yours as long as it stays that way (ex. coke keeps their recipe as a trade secret) IP Licensing- owners of IP often try to license it in an effort to gain more money than they could earn if they were the only user of this property; sometimes licenses impose restrictions on price or use that can limit competition among licensees or with the licensor; restrictions are most likely to violate the antitrust laws if the restriction and not the license is the primary purpose for the transaction ***TYING*** - Conditioning the sale of a good or service on the buyer also buying a second good; Also applies to leases. Must be two separate products; (Ex. Certain phones and data packages with them; Printers and printer ink) use Clayton Act analysis and Sherman Act 1 ****Clayton Act Analysis- Alleged relevant market valid? (first state what the relevant market is). Is there an exclusive dealing contract? Did D enter into a sufficient number of de facto exclusive dealing Ks such that is substantially lessened competition or tended to create a monopoly in a valid relevant market? D have valid business justification for entering into those

Ks? Did the P suffer injuries as a result of the Ds exclusive de facto dealings Ks? Preponderance of the evidence standard. RELEVANT PRODUCT MARKET- s must prove, by prepon of the ev the existence of a relevant product market. The basic idea of a relevant product market is that the products within it are rsbl substitutes for each other from the buyers point of view; that is, the products compete with each other - Jefferson-Parish Test - 4 elements to a per se tying violation: (1) tying and tied goods are two separate prods; (2) has market power in the tying product market; (3) affords consumers no choice but to purchase the tied product from it; (4) tying arrangement forecloses a substantial volume of commerce (Microsoft) Two kinds of violations Under RP Act: (1) Primary-line: A form of predatory pricing (similar to predatory pricing schemes actionable under 2 Sherman Act); (2) Secondary-line: Competition is hurt among buyers; Requirements for violation: (1) Strong interstate commerce requirement (generally, one sale must cross a state line); (2) Sales of commodities (not leases, not services); (3) Like grade and quality (proves the discrimination); (4) Competitive injury (for secondary-line, differentially treated buyers must compete) Affirmative defenses: (1) Cost-justification; (2) Good-faith in meeting competition ***MERGERS*** - a permanent union of previously separate enterprises; gen. governed by Clayton and Sherman Acts; can dramatically increase concentrations in relevant markets Classified according to the market relationship of the merging parties: HORIZONTAL MERGERS involve parties that are competitors; VERTICAL MERGERS parties that are or could become buyer/seller; CONGLOMERATE MERGERS every other case Motives for Merger: anticompetitive reasons; easier expansion or entry; operating efficiencies and scale economies; financial gains without new efficiencies; financial gains with new efficiencies; management goals; substituting better management; defensive mergers; net reckoning ***See WYPADKI 24 for HHI Index *** used to see how concentrated market is ***BANKRUPTCY*** **Goals: (1) seeks orderly and equitable repayment of claims for the benefit of creditors, and; (2) it offers an economic fresh start to the proverbial honest but unfortunate debtor "it gives to the honest but unfortunate debtor ... a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt" Local Loan Co. v. Hunt; BK is exclusively FEDERAL LAW Creditors and Their Liens a LIEN is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. Consensual liens the debtor voluntarily nominates some if his or her property as collateral to secure a loan; Judicial liens if the is unwilling to pay voluntarily (after losing a lawsuit), you must now take steps to levy execution of your judgment ***See WYPADKI 27-28 for more on statutory liens and Fair Debt Collections Act*** ***CONSUMER BK*** Getting Started: - first the debtor files a petition a basic request for bankruptcy relief; average filing fee for Chapter 7 is $299; there is an exception for people whose income is less than 150% of the official poverty line to request a waiver; debtors attorney gets clerk to file with a bankruptcy clerk; debtor gathers docs ***CH. 7 LIQUIDATION*** - straight BK; an automatic stay goes in effect as soon as petition is filed (protects consumer from creditors attempting to continue to collect debt from debtor Property Exempt From Seizure: policy reasons for exemptions (1) the debtors family would become a charge on the community without exemptions (welfare) (2) give them enough property to get out of the hole so they can get a fresh start and earn money and contribute to the economy; (3) clothes have little resale value to the creditor but are crucial to the debtor ***secured vs. unsecured creditors see WYPADKI 33*** - exemptions statutes are NOT just for BK; they are exemptions for execution on debts, generally Personal Property Exemptions: food, home furnishings; tools, equipment, etc for farming purposes; cattle, horses (limiting numbers); household pets - state statutes differ for how much is exempt; Texas was generous, Wyoming less generous

Only if there is money left over do the unsecured creditors get their money: The order is: (1) take out sales expenses; (2) pay off lien to secured creditors; (3) take out exemptions; (4) only then can you pay the unsecured creditors ***See WYPADKI 30 for means test*** "means test" =whether your income is low enough for you to
file Ch 7; formula designed to keep filers with higher incomes from filing for Ch 7; High income filers who fail the means test use Ch 13 to repay a portion of their debts, but cannot use Ch 7 to wipe out their debts alto

General Principles of Liquidation: At the moment of filing, the debtors non-exempt property becomes property of the bankruptcy estate; that property will then be liquidated turned into cash and distributed to creditors. The pre- petition debts will then be discharged. ***See WYPADKI 34 for WHO GETS WHAT IN CH. 7*** *** CH. 13 ADJUSTMENT OF DEBT/WAGE EARNERS PLAN*** Focuses on using future earnings, rather than accumulated assets to pay creditors Ch 13 roles of the trustee (debtor retains control of the property of the estate) Does NOT have the function of collection, preserving, and selling the property of the estate (as in Ch 7) 1.) object to improper creditor claims; 2.) ensure the debtor gives up the required amount of income; 3.) asserts any objections to the debtors discharge; 4.) expected to recommend approval or denial of confirmation of a debtors plan; 5.) urges compliance, and if need be, files to dismiss the debtors case for nonpayment CH. 13 Plan Pmnts to Secured Creditors: one of the most common reasons to choose Ch 13 BK is that the debtor wants to keep property that would otherwise be subject to security interest; ct must solve two issues when a secured creditor wants to repossess and sell the collateral 1.) protection of secured partys interest in the collateral while case going on; 2.) adequate pymnt to the secured party *** See WYPADKI 35-39 for more on CH. 13*** Three options for satisfying a debt despite bankruptcy: Redemption; Reaffirmation; Ridethrough (see WYPADKI 33) ***BUSINESS BK***Ch 7 Liquidation and Ch. 11 (a lot like 13 for consumers) ***CH. 11 REORGANIZATION*** - company becomes like the trustee and exercises trusteelike powers b/c it is not a person like in consumer BK, it is a company so likely a CEO; the discharge happens upon confirmation of the plan as soon as everything is liquidated; debts get discharged and then everyone has to live by the plan - powerful tools to aid in negotiations: (1) the automatic stay and breathing room it brings; (2) the possibility of adopting a plan that will legally bind all creditors, even though a minority reject it; (3) for six months or more the company has the exclusive right to present a plan before they have to argue with creditors; (3) the turnover and avoiding powers*** See WYPADKI 40-41*** ***CONSUMER LAW*** ***See WYPADKI 53-56*** Telemarketing- Do Not Call reg.-prohibits calling to solicit goods (unless charitable;current bus) CAN-SPAM Act- prohibits untruthful emails, identify sender, opt-out provisions Door to door sales- requires being outside the regular place of business; requires info about cancelling-oral notice and cant misrep right to cancel; Express warranties- arise from seller activity, typically statements the seller makes about the characteristics of item; Implied warranties- inferred from goods The Magnuson-Moss Warranty Act: Express warranty and implied warranty (WYP 46) (1)Show the existence of an express warranty, that is was breached, and that the breach proximately caused a loss; (2) the product failed to perform in accordance with warranty terms Essential elements in a UCC express warranty suit against the dealer and manufacturer: (1) the existence of a defect in the operation of the vehicle; (2) the defect resulted from factory materials or workmanship; (3) the presented the vehicle to the automobile dealer with a request that the defect be repaired; (4) the dealer failed or refused to repair the defective parts Lemon Laws and Signaling-wouldnt offer warranty if bad car; would lose money Main themes of Credit CARD Act: Abetting free market; Disclosures; Choices; Restraining market; Capping fees; Giving consumer the best of offered interest rate; Fair Credit Reporting Act; Consumer rights; Duties on info furnishers; Duties on users; Duties on bureaus