Google Antitrust Case
google pays apple to install it’s search engine on all new phones, US government is suing them
4 Ways Antitrust Laws Enforced
1) justice department can file a case, democrats are historically more active in antitrust laws, 2) federal trade commission has right to enforce, can only file civil lawsuits, 3) state attorney generals can file civil or criminal lawsuits, 4) private parties can sue
Antitrust law scope
applies to all businesses
Sherman Act Section 1
a clear trigger for this section is a “contract”, “combination”, or “conspiracy”, whether two actors are acting in a conscious way for joint benefit
Price leadership
when a company sets a trend for prices and other companies follow (only illegal if they agree beforehand)
Per se rules
these actions are inherently illegal under the antitrust laws, court wont apply rule of reason because the restraint of trade violation is so obvious
Bid rigging
a per se violation: illegal conspiracy like rotating bids or agreeing beforehand to jack up the prices
Sealed bid
how much a company is charging for a service, don’t know what competitors are offering
Price fixing
a per se violation: competitors get together and set a price
Territorial divisions
a per se violation: agree not to compete in certain areas
Group boycotts
any agreement by two or more sellers to refuse to deal with, or boycott, a particular person or firm, is prohibited (exception are covenants not to compete)
Rule of Reason Test
considers the facts surrounding the business practice before deciding if it helps or hurts competition, 1) pro and anticompetitive effects of the restraint, 2) competitive structure of the industry, 3) the firms market share or power, 4) the history and duration of the restraint or act, 6) any other relevant factors
NCAA and student athletes
agreement forbidding competition among schools was found illegal, and now athletes can be paid insane amounts of money
Tying arrangements
occurs when the sale of one product is conditioned on the buyers purchase of another product
Per se tying arrangement
seller must have monopoly power from the tying product and use this power to leverage sales of the separate tied product
Tying product
product everybody wants (market power)
Tied product
product nobody wants but forced to buy
Rule of reason tying arrangement
if there is no monopoly power, courts will use the rule of reason test
Tying arrangement example
microsoft illegally tied internet explorer to windows operating system
Monopoly power
ability to control, or to set the price, or to prevent others from entering the business
Monopoly legality
monopoly is legal if its the result of patenting something, expanding quickly, superior product, government granted/approved monopoly (highly regulated utilities)
The Sherman Act Section II
stopping monopolies before they exist
Clayton Act
the clayton act looks to potential problems in the future and tries to curb them, prohibits certain acquisitions (purchasing rival companies) if the result will be a significant decrease in competition (kroger and safeway merging was stopped)
Determining if a merger is lawful courts must
define relevant market = product market + geographic market
