Shifting and Shrinking Common Ground

doj's standard. but under the new heightened disproportionality standard, she envisioned this (4) 40 ftc's powers. after the broad grant of power allowed by the court in 190 48 unilateral conduct has previously been deemed as a potential violation of varney to the head of the department of justice antitrust division. see john r. wilke, u.s. news: [product 1]."). 15 u.s.c. §§ 1-2 (2000). dealing.153 right of action to enjoin the practices prohibited by the act or to obtain damages following the which unfairly tends to destroy competition itself." doj report, supra note 4, at 10 (quoting id. at 767 n.13. with firms that enjoy monopoly or near monopoly power, and prescribes a legal regime that places report.172 competition" prong grants the ftc the power to pursue antitrust violations. roger e. schechter, monopolist notice that its conduct is being monitored. while the tie may unreasonable.45 decision theory suggests the use of per se rules and bright line tests.138 a profit-sacrifice test . . . should not be the test for section 2 liability." id. at 42. injury was a natural result of "market power that is lawfully in the hands of a id. at 47. llp, 540 u.s. 398, 407 (2004)). it should be noted that this assumption is not unanimously held. reducing "false positive" conduct in areas outside of sherman section 2.77 and if the element of the free-market system."23 id. at 224. the court understands that "'[i]n order to recoup their losses, [predators] must could be suggested that the defendant's refusal to sell at retail showed a the first two principles describe the necessary elements required in a 525 u.s. 128, 135 (1998) (holding that the per se rule against boycotts does not apply 35 124 justice brandeis was an early proponent of creating may not occur, but hoped that the hearings would "identify relative id. make sure it does not mistakenly classify conduct as anticompetitive, i.e., in nynex corp. v. discon, inc.,68 fourth, the in this analysis, the issue centers on conduct that does not violate the conduct that appears to meet the sherman section 2 standard as articulated 681.pdf [hereinafter doj report]. conduct is not anticompetitive, the rule of reason has narrowed its focus in power to itself if, in measuring a practice against the elusive, in those mitigate further shifts in favor of business interests, the ftc must continue beyond an offer to buy at retail. consumers as well as competitors."98 id. at 2 ("developing the law--or, more accurately, influencing the development of the (2) majoras speech], available at http://www.ftc.gov/speeches/majoras/060620revisedhearingon and expanding the creation of safe harbors.168 embraced within the general enumeration of the first section."49 see id. at 14-15. products are separate. see jefferson parish, 466 u.s. at 21-22 ("[n]o tying arrangement can exist at other times, the ftc has interpreted its ftca section 5 obtain enough market power to set higher than competitive prices, and then must sustain those prices 36 that these signposts would then be thoroughlyexamined before "determining id. at 5. (2) (a) if the answer to (1) is "yes," then the conduct ought competition, 71 antitrust l.j. 1, 37-38 (2003) (describing justice brandeis's views on concluded that the defendant "elected to forgo these short-run benefits because it was more 88 reasonable basis in law.'" atl. ref. co. v. ftc, 381 u.s. 357, 367 (1965) (quoting nlrb v. hearst all) concerted acts are illegal per se"). doj report's focus on business interests over those of the consumer,35 the ftc's separate ability to pursue anticompetitive conduct is and maintaining monopoly power should be prohibited as improper."124 ftc statement, supra note 5, at 2-3. the ftc is also concerned that monopolies may prerequisites for predatory pricing violations under sherman section 2.60 after analyzing the general standards for exclusionary conduct, the goals and expectations from the hearings foreshadowed the split. the ftc's court's recent antitrust decisions filed under section 1 of the sherman court of equity, considers public values beyond simply those (f.t.c. apr. 19, 2006) ("valassis invited its competitor to collude with valassis in violation of predatory-bidding claims."). antitrust cases). 92 broadly stated, the disproportionality standard it is 598 delaware journal of corporate law [vol. 34 deceptive acts or practices" language in the 1938 wheeler act.97 29 id. 2009] shiftingandshrinkingcommonground 599 that "overly broad prohibitions against bundled discounting mayinhibit pricing practices that benefit id. at 59-60. 4 see doj report, supra note 4, at 77-90 (discussing the development of tying 15 u.s.c. § 45(a)(2) (2000). remote." id. at 17-18. cement inst., 333 u.s. 683, 693 (1948) ("the [ftc] has jurisdiction to declare that conduct tending consensus, however, to lead to the development of "signposts for when the doj.gov/atr/public/press_releases/2005/213369.pdf. conduct that violates section 2 of the sherman antitrust act (sherman copperweld, 467 u.s. at 767. the court stated: specifically, the ftc takes issue with the assertion "that the risk of over- 96 judgment for that of the monopolist."104 difficult to show that businesses are acting in an anticompetitive manner. "the sherman act contains a 'basic distinction between concerted and enshrined in the letter or encompassed in the spirit of the 540 u.s. 398, 409-10 (2004) (limiting a refusal-to-deal violation to retail prices and the court held that a ski resort that eliminated a competitor may leave that impression."43 id. at 8. the ftc specifically critiques the safe harbors suggested for unilateral conduct because the court determined that the defendant held legal see supra note 90 and accompanying text. chance that it will not meet the more stringent standard. despite this concerning the prohibition of unfair methods of competition in section 5 of the federal trade disproportionality test specifically for bundled discounting); id. at 140 (stating the disproportionality in monopoly power, the plaintiff's sherman section 2 theory of conspiracy to an important role in the ftc's interpretation of its own enforcement at the culmination of the joint hearings the agencies' differing 61 allowing monopolists to refuse to sell at cost-based prices). see ftc statement, supra note 5, at 4. the ftc acknowledges that "clear rules are id. at 90 (stating the disproportionality test specifically for tying); id. at 105 (stating the motivating the firm to motivate in the first place."). id. laws."21 tactic may "hurt consumers by raising telephone service rates,"71 (4) the equally the conduct, if left unchecked, will result in an antitrust violation. "consider[] public values beyond simply those enshrined in the letter or encompassed in the spirit of some conduct that was an incipient violation under the previously applied 32 81 zation, the agencies appear to implicitly agree that legal monopolies have a the ftc's standard under ftca section 5 is to prevent the use of "[u]nfair methods of 5] . . . was to enable the commission to restrain practices as 'unfair' which, although not yet having ftca section 5 may also reduce legal fees for all parties.194 harms substantially outweigh its likelyprocompetitive benefits."149 under sherman section 2.80 shift causing a correlative shift in the ftc's standard. because of this se anticompetitive10 see town of concord, mass. v. boston edison co., 915 f.2d 17, 23-24 (1st cir. 1990) 3. the relationship between sherman section 2 and ftca section 5 grinnell corp, 384 u.s. 563, 570-71 (1966). the "monopoly power" principle is synonymous to the id. at 435 (brandeis, j., dissenting). 17,872-17,874 (apr. 7, 2006). long enough to earn in excess profits what they earlier gave up in below-cost prices.'" id. at 225-26 brook group ltd., 509 u.s. at 226. id. and second that there exists "a practices that violate the sherman act and the other antitrust laws but also id. recommend the no-economic-sense test as a necessary condition for liability in all section 2 cases, see nat'l soc'y of prof'l eng'rs v. united states, 435 u.s. 679, 688 (1978). overarching themes. first, the ftc is "concerned that voices representing better tie between antitrust law and package licensing, 40 colum.j.l.&soc.probs. 267, 276 86 firms' anticompetitive conduct that is not deterred." id. in considering enforcement costs in the even if no legitimate business for the purchasing decisions are shown). 72 marketing to children: the federal trade commission and the kid-vid controversy, 39 loy.l.a. (2) the anticompetitive-conduct without creating a sufficient improvement in performance to fully offset these potential adverse 46 offices of curtis v. trinko, llp, 540 u.s. 398 (2004); nynex corp. v. discon, inc., 525 u.s. identifies two types of errors: type i (false positives) and type ii (false negatives). id. the doj these extremes, the doj seems more concerned with the problem of this language is significant as it (b) if the answer to (1) is "no," the commission ought then the two agencies, therefore, share relationship the ftc will be able to enforce conduct that does not meet the developed tests to provide tools to businesses and judges for assessing 33 both the probability and the magnitude of harm from each."136 sherman section 2.119 that our two-pronged brooke group test should apply to our predatory-bidding claims."). ross-simmons hardwood lumber co.,13 venture was done for "any normal business purpose." id. at 608. therefore, the jury may have bundled discounting. single-product loyalty discounts occur when "a seller . . . offer[s] discounts v. conclusion markets in which enforcers or courts impose liability erroneously, but in other markets as well." id. enforce antitrust conduct under the sherman act,37 internet-law expert is nominated as antitrust chief, wall st. j., jan. 23, 2009, at a3. assistant been difficult to establish since the ftca's enactment in 1914.91 court's recent shrinking interpretation of monopoly conduct necessitates the identify and "articulat[e] points of consensus."29 the use of ftca section 5 will also subject companies to lower costs consumer interests necessitates a lower standard that would find more 78 based rate of compensation . . . tells us nothing about dreams of 27 u.s. 398, 414 (2004) ("the cost of false positives counsels against an undue expansion of [section] petitive benefits, or (2) if there are procompetitive benefits, the [tying, ticket relationship even when the competitor offered to buy the tickets at "under the disproportionality test, conduct that potentially has both procompetitive and clarify. conduct is anticompetitive. if either agency determines that unilateral of unilateral conduct and effectively replace both the rule of reason9 the doj in ftc v. 37 133 198 between the two agencies. during opening remarks, assistant attorney jurisdiction in antitrust enforcement. in disagreeing with the doj's interpre- 49 heightened standard is an approval of the court's recent jurisprudence, as 197 and the costs of administration in determining the standards to be applied to single- 30 to apply the "rule of reason" analysis to unilateral conduct, while typically competition and monopoly.95 plaintiff in nynex alleged a boycott by wayof a vertical agreement between see supra notes 107-09; see also james langenfeld & daniel r. shulman, the future of conduct may harm competition and when it typically does not"32 1, 14 (2007) (discussing the unanimous vote in the "valassis invitation to collude case" and stating the court warned that the prerequisites are "not easy to "promise of monopoly profits drives firms to innovate and compete."160 competitors."125 see platt majoras speech, supra note 22, at 13. implicit assumption that a firm's desire to obtain monopoly power may lead see supra notes 129-37 and accompanying text. ftc should ask: 164 a civil action to recover a civil incurred by firms in complying with the law." doj report, supra note 4, at 16. the ftc's lower see ftc v. sperry & hutchinson co., 405 u.s. 233, 244 (1972) (stating that the ftc may 174 509 u.s. 209 (1993). that do not fit neatly within sherman section 2 unilateral conduct such as 57 consumers to be adversely affected by lawful monopolistic conduct.197 584 delaware journal of corporate law [vol. 34 as unilateral ftca section 5 authority if the courts implement the doj's proposed different punishments. the remedy available for an ftc violation is less than that imposed see supra note 105. see bell atl. corp. v. twombly, 550 u.s. 544, 553-56 (2007) (overruling conley v. 167 it is understood that both agencies may pursue violations of the sherman act. see ftc v. typical illegal per se finding for collusive conduct, therefore, was not evaluating conduct under section 2."141 the next two principles describe conduct that it should be noted that the last four sherman section 2 cases the doj follows the court's interpretation that the purpose of the sherman act "'is not to protect 15 u.s.c. § 45(a)(2) (2000). these are two separate powers. the "unfair methods of 2009] shiftingandshrinkingcommonground 585 pursued by the doj. this may serve as a remedial action and temper "unfair andy j. miller, note, a procedural approach to "unfair methods of competition," 93 "bundled discounting is the practice of offering discounts or rebates contingent upon a press release, u.s. dep't of justice, doj and ftc to hold joint public hearings on monopoly in one market to establish a monopoly in another.183 id. § 15(a) (stating that a plaintiff "shall recover threefold the damages by him sustained, test, but would not be pursued by either agency. this conduct, however, 60 135 186 the language of section 1 implies more than one actor. section 1 states, "every contract, "webcast" hyperlink to "oct. 17, 2008" hyperlink; then follow "transcript" hyperlink under "panel standard. because the ftc may target a business practice before it reaches a conduct that may evolve from incipient antitrust violations to full-blown responded bycritiquing the determining that the conduct should then be analyzed using the disproportionality test). gratz,92 11 agencies acquire their enforcement power from different statutorybases and a retail claim that cannot succeed, and alchemize them into a new form of antitrust liability"). 55 invitations to collude107 recent decisions in bell atlantic corp. v. twombly,11 procompetitive price competition." id. at 117. despite these advantages, the doj "thinks further 19 be condemned;115 74 violative per se rule to boycotts between horizontal competitors.69 89 section 2 enforcement is crucial to the u.s. economy. it is a vexing area, however, id. at 222. predatory bidding convince us that our two-pronged brooke group test should apply to our relying on the decision theory framework applied in the doj 93 but conduct that the ftc may have previously pursued may be hard to find the line between competitive and anticompetitive conduct hearings that foreshadowed the resultant split. spectrum sports, inc. v. mcquillan, 506 u.s. 447, 458 (1993)). in describing the fourth principle, monopolization under the sherman act requires "(1) the possession of monopoly power although this case was decided after the doj submitted its report, the court's denial of liability in see barnett speech, supra note 22, at 2; platt majoras speech, supra note 22, at violate the sherman act."). the ftca's reach, however, extends to conduct that subsequentlymay were underlying differences in the agencies' expectations at the outset of the 2 contrasts the collective language in section 1. see id. the court acknowledges that there is ross-simmons hardwood lumber co., 549 u.s. 312 (2007); verizon commc'ns inc. v. law indicator of anticompetitive conduct that the ftc can comfortably enforce. thereafter contrived, which restrained competition or might lead to such restraint if doj believes that "whether conduct has the potential to exclude, eliminate, or weaken the the court established two based on these increasing barriers to in expanding the ftc's authority to v. consumers must remain kings and queens to this type of conduct). for any public or private plaintiff to satisfy it." id. at 8. practice is likely in the circumstances to exclude from defendant's market an equally or more 3 filed jointly by the ftc and doj in trinko as support for the standard.150 would violate those acts."). see marc winerman, the origins of the ftc: concentration, cooperation, control, and that should be tied to antitrust analyses). id. at 13-15. weighing against enforcement of [s]ection 2."165 170 collaborative effort at the outset of the joint hearings, the agencies' differing strongly alludes to the ftc's antitrust enforcement standard. "[n]othing in the literal meaning of those terms [that] excludes coordinated conduct among officers 5-10. powers.38 2009] shiftingandshrinkingcommonground 601 effect on consumers, and the flawed profit-sacrifice standard, 73 antitrust l.j. 311, 329-30 ftca section 5 has remained the sole jurisdiction of the ftc, and there are id. at 4. fed. trade comm'n, a guide to the federal trade commission, http://www.ftc.gov/bcp/ occurs in the overlap of the agencies' enforcement areas. because this (or rebates) on all units of a single product conditioned upon the level of purchases." id. at 106. 85 prices because a predatory bidder does not necessarily rely on raising prices weyerhaeuser co. v. ross-simmons hardwood lumber co.,65 see ftc v. sperry & hutchinson co., 405 u.s. 233, 244 (1972). see id. § 15. unilateral conduct that is condemned in the gray area between 115 deborah platt majoras, both agreed that the agencies must fulfill their should be on the additional output generated by the incremental input purchases." id. at 74. the attorney general varney was a commissioner at the ftc and also "helped persuade justice officials see supra notes 107-09 and accompanying text (citing cases that evidence the ftc's antitrust l.j. 669, 676 (2005)). combinations that, as a result of evolving economic conditions, are currently be legal under the sherman act, the monopolist is warned that dissent, noted that "[ftca section 5's] action was to be prophylactic. its 79 include enforcement of "unfair or deceptive acts or practices," the application of its ftca section 5 powers, as well as attempting to expand sperry & hutchinson, the court determined: see supra notes 107-08. disproportionality standard for the ftc's enforcement powers to reach. this enables the doj to prosecute and punish "[e]very person who shall monopolize, or acumen, or historic accident."52 matsushita elec. indus. co. v. zenith radio corp., 475 u.s. 574, 594 (1986). 143 antitrust law. given the commission's propensity to explore the fringes of 15 u.s.c. § 2 (2000). 8 136 single firm appears to 'restrain trade' unreasonably, for even a vigorous 165 monsanto co. v. spray-rite serv. corp., 465 u.s. 752, 761 (1984)). pacific bell tel. co. v. linkline commc'ns, 129 s. ct. 1109 (2009); weyerhaeuser co. v. 146 position enjoys no support in the law, and it is so ill-defined that it will be hard, if not impossible, while the agencies' antitrust remedies may be different, a violation of charging of monopoly prices, is not only not unlawful; it is an important platt majoras speech, supra note 22, at 13. 2009] shiftingandshrinkingcommonground 609 section 2 of the sherman act 1 (june 20, 2006) [hereinafter barnett speech], available at 221 u.s. 1 (1910). shortcoming, in terms of the sherman act, the conduct may be of the type based on the difficulty of devising an appropriate remedy."166 violations6 63 see id. at 45, 47. in this brief the agencies argue that, in applying the second prong of the unilateral, unconditional refusals to deal with rivals should not play a what workable legal rules can be applied to the specific conduct."33 section 2 violation.193 the agencies also wanted to determine when particular types see ind. fed'n of dentists, 476 u.s. at 454 (stating that "'unfairness' under the ftc act copperweld corp. v. independence tube corp., 467 u.s. 752, 767 (1984) (quoting antitrust enforcement.200 http://www.usdoj.gov/atr/public/speeches/216738.pdf ("the federal trade commission and the [t]he committee reports and the statements of those in charge of the trade the sherman act.16 despite the ftc's lower standard in antitrust regulation, the doj's the importance of administrability when crafting liability standards under it is this area 141. the doj also "emphasizes that exclusive dealing affecting more than thirty percent should be first, in considering enforcement costs, ftca section 5 imposes lower fines consumers." id. at 105. the doj report treats single-product loyalty discounts separately from monopolist's conduct because the monopolist had lawful possession of market power. nynex conduct goes unchecked, will it result in an antitrust violation? section 5 of the federal trade commission act."). antitrust act (sherman section 1) and sherman section 2. the court's also concerned with the doj report's assumption regarding deterrence.162 39 69 of new technologies through investment."); robin cooper feldman, essay, defensive leveraging in to vigilantly enforce the edges of ftca section 5 so that any heightened 168 unconditional refusal to deal harms competition." id. and practitioners in the antitrust community and improperly favored the the ftc derives its antitrust enforcement powers guilty of a felony . . . ." id. § 2 (emphasis added). the "every person" language of sherman section unfair methods of competition . . . and unfair or deceptive acts or practices in see pamela harbour et al., fed. trade comm'n, statement of commissioners monopolize, or monopolization thereof, even []though the acts by which joined by three of the four ftc commissioners,34 section 2 violations, the ftc must diligently enforce ftca section 5 in on the consumer. she anticipated the new standards that would result from violative conduct. the doj recognizes that "[c]ourts and commentators indicative of the court's recent shrinking of violative conduct under the see doj report, supra note 4, at 14 (stating that "[r]ules that overdeter . . . undermine any potential increase in the doj's enforcement of sherman section 2. see supra notes 11-15 and id. § 45(m)(1)(b). conduct from being used in the future because the conduct has been barred beyond the critique of the doj's proffered disproportionality engaged in that did not have the same (or greater) exclusionary effects." id. the doj "believes that 162 1163, 1165 (1986) (stating that the doj filing a complaint "is likely to trigger the filing of private and leave consumers to fend for themselves. thus, the doj is recom- the courts were to determine what conduct, even though it might then be short of a sherman act "deceptive acts or practice" to include restricting commercials from advertising sugared products to in general, the court gives great deference to the ftc's interpretation driven by 'king and queen consumer'" must be the ftc's mandate in doj report, supra note 4, at 83. analyzes these tests using the framework provided in decision theory.135 and economic growth.'" id. (quoting verizon commc'ns inc. v. law offices of curtis v. trinko, finding concerted conduct illegal per se.50 ications inc. v. law offices of curtis v. trinko, llp,12 the sherman act antitrust standard.18 see in re gen. foods corp., 103 f.t.c. 204, 365 (1984) (refusing "to expand the reach of (6) concern with underdeterrence and overdeterrence;118 "the factfinder [to] weigh[] all of the circumstances of a case in deciding federal trade commission (ftc) began a series of public hearings with a time arises, and the monopolist has time to implement these strategies, the the doj 592 delaware journal of corporate law [vol. 34 2009] shiftingandshrinkingcommonground 595 2 liability."). 195 mending the elimination of refusals to deal as anticompetitive. this type of sherman section 2 case.121 context, the cost of false positives is higher than the cost of false 2 violation can be expected to pay large fines, legal fees, serve prison time, met the previous rule of reason standard will not be pursued by the doj. the ftc's power to regulate "unfair methods of competition" has 602 delaware journal of corporate law [vol. 34 ftc can use ftca section 5 to slow or stop the monopolist's future 131 defendant's anticompetitive conduct but also the loss to competition and consumers inflicted byother 188 42 84 conduct and sherman section 2.20 clear that the federal trade commission act was designed to supplement and bolster the sherman ences to the following types of unilateral conduct: (1) price predation;142 and consider public values beyond the scope of the antitrust onset of the sherman section 2 was proper and the "undistorted competition, id. inc. v. mcquillan and allows "conduct which is competitive, even severely so, but against conduct 525 u.s. 128 (1998). the court has allowed the ftc a broader antitrust mandate by allowing the conduct that is unreasonable under the sherman act "rule of reason" type ii errors are false negatives. doj report, supra note 4, at 16. in the antitrust considering the risk of inevitable error, the problems of type i errors are correspondingly heighten the ftc's standard for unilateral conduct to meet the doj recommends the same test for each of these types of conversely, "the cost of false negatives includes not just the failure to condemn a particular reasons."105 the monopolist may increase prices or reduce output--an outcome are: (1) the monopoly power requirement;113 173 be condemned as a [ftca] [s]ection 5 violation.178 the anti- and pro-competitive effects of the challenged conduct, while many (though by no means see ftc v. cement inst., 333 u.s. 683, 708 (1948) ("a major purpose of [ftca section analyzing conduct under section 2." doj report, supra note 4, at 38. but after the second circuit's although the invitation to explore brandeis's dissenting opinion in gratz, and the spirit of that opinion is the fifth and sixth principles deal with enforcement and selecting (1) does this behavior violate the antitrust laws? 38 bundled discounting, or exclusive dealing] produces harms substantially that the federal trade commission does not arrogate excessive see doj report, supra note 4, at 46-47. the methods of competition" in the adjacent market. and other practices that deceived jedec about the nature and scope of its patent interests while the regarding [s]ection 2."36 (5) under section 5 of the federal trade commission act (ftca section 5). conduct under the purview of the federal trade commission act"). 16 the ftc's current efforts consumers and cannot be said with any confidence to be anticompetitive in almost all circum- 128 sherman section 2 enforcement). doj report, supra note 4, at 39. "generally, a profit-sacrifice test asks whether the disproportionate to those benefits."154 competition policy related to single-firm conduct (nov. 28, 2005), available at http://www.us competitor." id. rence.126 586 delaware journal of corporate law [vol. 34 of creative destruction:the need for clear and objective standards for enforcing see doj report, supra note 4, at 58. the doj believes that "the focus of the price-cost analysis 140 in the relevant market and (2) the willful acquisition or maintenance of that power." united states v. 76 difficult to present and prevail on a sherman act claim. have long recognized the difficulty of determining what means of acquiring of single-firm monopoly conduct 23 24 independent action.'"40 forcing the plaintiff out of business.70 is unlawful only when it threatens actual monopolization."42 the ftc's "unfair 125 accompanying text. 121 id. at 9-10. making decisions when information is costly and imperfect."). influence in sherman section 2 jurisprudence. id. 2-3. combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce see ftc v. motion picture adver. serv. co., 344 u.s. 392, 394-95 (1953) ("it is also but unilateral conduct that does not the agencies' divergent see doj report, supra note 4, at 18. burden was subsequently extended to unilateral predatorybidding conduct.66 82 violations. handles inevitable errors by adhering to "a general rule that, in the section 2 id. at 767. the antitrust laws"). 129 s. ct. 1109, 1123 (2009) (denying to recognize liability for a price squeezing claim mutual legislative duty to protect both competition and consumers.22 doj report, supra note 4, at 91. in considering the appropriate legal standard, the doj worries 108 reduce "false positives" because "mistaken inferences . . . chill the very 187 official airline guides, inc. v. ftc, 630 f.2d 920, 927 (2d cir. 1980). the second should be analyzed using the disproportionality test). while nynex does have a tangential sherman section 2 issue, this case is essentially a 161 have long recognized the benefits of bright-line tests of legality (also known as safe harbors) when competitiveness of equally efficient competitors can be a useful inquiry and may be best suited to this effort was cosponsored by both the doj states that it is taking its cue from the court's id. at 132. ltd. v. brown & williamson tobacco corp.,59 at least seven core principles regarding section 2."112 rebates a customer receives is based on the quantities of multiple products bought over some period." jurisprudence, 93 iowa l. rev. 1207, 1223 (2008) (stating that "claims involving unilateral 15 u.s.c. § 45(m)(1)(b) (2000). u.s. 1, 5-6 (1958). the doj believes, in determining the appropriate legal standard to analyze this anticompetitive conduct,184 in an effort to define unilateral conduct that is violative of the competition from business conduct to attain or maintain a monopoly, 71 fed. reg. 17,872, 606 delaware journal of corporate law [vol. 34 enforcement to deal with the problems inherent in under- and overdeter- or all of the above. see generally marc winerman, the ftc at ninety: history through headlines, 72 failed to recognize a new liability theory. implicit in the doj report's 159 see holloway v. bristol-myers corp., 485 f.2d 986, 988-89 (d.c. cir. 1973) ("the act realm, this would include conduct that has not been caught by an enforcement agency but is inefficiency and have reduced incentives to innovate."161 assessment is necessary before concluding that it is appropriate in all cases." id. based on this void, the ftc must actively pursue incipient antitrust 179 rule of reason standard may now be too incipient under the laws. therefore, the ftc's enforcement standard for antitrust violations is see ftc v. brown shoe co., 384 u.s. 316, 320-21 (1966) ("later cases of this court, in the past, the court has stressed the need to the same exact conduct can have procompetitive and exclusionary effects. an necessarily less than a sherman section 2 violation. the profit sacrifice test;131 to reach the goals enunciated in the hearing.26 involving predatory pricing, loyalty discounts, bundled discounts, and exclusive dealing. see id. at no. 2 v. hyde, 466 u.s. 2, 19 (1984)). there must be sufficient demand, however, when the two us federal antitrust enforcement: learning from past and current influence, 8 sedona conf. j. and (3) exclusive . . . ."); deborah platt majoras, chairman, fed. trade comm'n, the consumer reigns: concerns that raise difficulties in interpreting the sherman section 2 analysis. 104 id. two recent sherman section 1 cases, the court has raised the pleading bar avoidable cost. id. in the bundled discounting context, the doj adopts the same price-cost safe without the threat of follow-on actions.190 general exclusionary conduct standards: (1) the effects-balancing test;130 anticompetitive unilateral conduct under the doj's standard. if the joint agency to protect public values. this explains why the ftc can find an 90 180 disproportionality test.148 the ftc first criticizes the doj report's assumption that the types of unilateral conduct that are truly anticompetitive and harmful to section 5 gave it the power to pursue attempts to monopolize.106 550 u.s. 544, 561-66 (2007) (overruling and replacing the conley v. gibson, 355 u.s. 41 expansionary stance is also evidenced in a recent workshop where the ftc "explore[d] the scope of this behavior results in procompetitive benefits that do not produce harms such results are attempted to be brought about or are brought about be not 2009] shiftingandshrinkingcommonground 593 id. § 45(m)(1)(b). without rivals, standard or its report. the ftc alleged that the doj's new heightened these seven principles 150 commission itself put the extreme case, 'social, political, or personal reasons' for a monopolist's id. sources and aim to achieve different ends. the ftc's inherent focus on 73 156 particular pricing practices." id. at 44-45. 175 ence in the agencies' enforcement focus. the difficulty elements: "(1) the possession of monopoly power in the relevant market and 549 u.s. 312, 325 (2007) ("the general theoretical similarities of monopoly and but despite these have in recent years come to better appreciate[] the prospect of monopoly profits [which] may well "false positive" conduct and has applied a similar presumption in favor of nynex v. discon, inc.,14 the restriction that is apparent in the sherman section 2 context is law--in ways that help competition is an important goal for the antitrust division."). doj report, supra note 4, at 8. the doj report suggests that "[c]ourts and enforcers penalty of $10,000 per violation189 590 delaware journal of corporate law [vol. 34 sherman section 2, the doj's recommendation of a heightened standard seems that assistant attorney barnett hoped the product of these hearings would yield the same itive effects . . . anticompetitive under section 2 if its likely anticompetitive conduct-specific test is not applicable, the disproportionality test is likely the most appropriate test the power to expand upon basic legislative policy should be created." id. a definition of predatory pricing may be helpful: action,41 part of the trade or commerce among the several states, or with foreign nations . . . ." 15 u.s.c. § 2 administrative agency initially apply a broad statutory term to a particular situation, our function is legal and academic communities. 53 185 137 id. at 720. this is in line with the notion that "[w]here the congress has provided that an the hearing foreshadowed the break between the agencies when the doj and describing the proposed theory as an attempt to "join a wholesale claim that cannot succeed with dangerous probability, of [the defendant] recouping its investment in below- 95 time,187 enforcement of [s]ection 2 is greater than the risk of under-enforcement."163 66 and swallowed by the doj in the antitrust arena. this outcome would not live id. at 11. the price squeezing context shows the court's propensity to shrink the sherman section 2 violative points of consensus would be valuable in assisting courts and putting publ'ns, inc., 322 u.s. 111, 131 (1944)). and wanted the new agency to regulate both . . . at or near the outer boundary of [section] 2 liability."55 14 perception that "the essential-facilities doctrine is a flawed means of deciding whether a unilateral, laws.7 bar for the government and private citizens to bring, and win, sherman this test has gained fame as the "rule of reason" that directs will continue to reach conduct that does not meet the new sherman section 2 the court limited the use of a a. the doj's dependence on disproportionality and deterrence doj then argues that the best way to measure incremental changes in cost is by using average aspen skiing test, "the harm to competition must be disproportionate to consumer benefits (in terms the ftc recognizes the along with the penalties, conduct is also subject to a cease and desist decisis, this may "inhibit[] courts from routinely correcting errors or updating the law to reflect the proposed disproportionality test in the sherman section 2 context would still see id. at 91-117 (discussing the development of bundled discounting jurisprudence and penalty,88 47 hearings, the various stakeholders that have a vested interest in antitrust enforcement and how in this sense, the ftc's legal standard straddles both competitive and because individuals are able to tack follow-on the end that the new standards "[a] tying arrangement may be defined as an agreement by a partyto sell one product but see supra part iii.a (describing the conduct that meets the standard). this approach suggests that in (2007) ("[m]onopoly power can potentially inhibit dynamic efficiency, the innovation and creation embracing all attempts to reach the end prohibited by the first section."48 or a consent order.89 standard.111 see otter tail power co. v. united states, 410 u.s. 366, 378 (1973) (stating that the competition above the interests of consumers by quoting from judge easter- or practices" prong allows the ftc to pursue false advertising and other consumer protection issues. recognition that distinguishing competitive and exclusionaryconduct is often no follow-on opportunities for private individuals.90 only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that jurisdiction for conduct that violates sherman section 2, but the ftc also in trying to find the proper enforcement balance, the ftc believes that the difficult;117 competition.2 ftc is concerned with the doj's emphasis on creating clear and ftc statement, supra note 5, at 5. the ftc blatantly states, "the department's id. 114 58 ftc's increased attention in monopoly matters.198 reaches conduct that is adjacent to, and does not reach, the doj standard.19 first prong of the grinnell test. the "anticompetitive-conduct" principle simplifies the elusive portionality test as "distort[ing] the rule of reason standard."170 the firm to innovate to the benefit of consumers.120 more than two years ago, the department of justice (doj) and the trade without a conspiracy or combination is not unlawful under [section] 1. from the "unfair methods of competition" language.86 split between the agencies is to be expected because of the ftc's broader antitrust laws do not require proof that an agreement of that kind is, in fact, anticompetitive in the see ftc v. cement inst., 333 u.s. 683, 708 (1948) (stating that "[t]he commission and unreasonable based on the "rule of reason" analysis, but will not meet the note 120 (describing the arguments regarding monopolies' impact on innovation and competition). 113 see id. at 49-75 (discussing the development of predatory pricing jurisprudence and department of justice 1 (2008), http://www.ftc.gov/os/2008/09/080908section2stmt.pdf requirement;114 concerted and unilateral behavior. the point remains, however, that purely id. at 43. 1. doj harbor as developed in the predatory pricing context, where bundle-to-bundle competition is meet the sherman section 2 standard. therefore, the doj's interpretation of monopoly position attained through a hard-fought competitive battle . . . may be crucial to see mark a. lemley & christopher r. leslie, categorical analysis in antitrust 67 of providing a superior product, for example) and to the economic benefits to the defendant (aside three types of single-firm conduct that does not meet its safe harbor in the output market to recoup its losses."67 there also appeared to be a split in the agencies' expectations of how the ftc to maintain a lower legal standard and pursue conduct that fails to reach along with the agencies' different focuses at the outset of the hearings, because the improper enforcement is limited to the falsely accused firm. the prohibition of 'unfair methods of competition' in section 5 of the ftc act." public workshop section 5, which allow for enforcement of incipient violations of the antitrust 87 doj report, supra note 4, at 46. advertising and antitrust policies, 64 b.u. l. rev. 265, 265 (1984). the "unfair or deceptive acts because of these difficulties, the court must try to balance 177 trade commision (oct. 17, 2008), http://www.ftc.gov/bc/workshops/section5/index.shtml (follow efficient competitor.' if a plaintiff makes such a showing, 'defendant can rebut by proving that standard is in line with the court's trend, and will continue to make it more among the several states, or with foreign nations, is declared to be illegal." 15 u.s.c. § 1 (2000) has retracted from this view. in trinko, the court demarcated "aspen skiing id. at 12. shortly after the doj report was published, the ftc announced an id. § 45(m)(1)(a)-(b). department actually implements the policy decisions expressed in its considering whether conduct constitutes "unfair methods of competition" the violations under ftca section 5 in order to hold the line for general maximizing only because of its exclusionary or other anticompetitive effects. the monopoly."57 part of the trade or commerce among the several states, or with foreign nations, shall be deemed conduct the antitrust laws are designed to protect."76 defendant's "refusals to sell at wholesale . . . [was] solely to prevent municipal power systems from potential to later raise prices. see united states v. trans-mo. freight ass'n, 166 u.s. 290, 324 conduct anticompetitive. the standard tacitly endorsed and aimed to extend 6 (3) the no-economic-sense test;132 154 the plaintiff must show "[f]irst . . . that the prices complained of are below 139 predatory-bidding scheme could succeed with little or no effect on consumer 100 outcome of the hearings would be used. while both agencies wanted the standard oil, 221 u.s. at 61. 182 report,192 decisions under this framework should propose "optimal legal standards previous grant of ftca section 5 power as "encompassing not only portionality test is likely the most appropriate test identified to date for (1979)). the ftc closed its remarks by stating, "this commission stands challenges to the ftc since its founding). platt majoras speech, supra note 22, at 8. sherman section 2 analysis is the consideration that the acquisition or in u.s. markets is free of distortion and that consumers are protected not from markets but through important in ensuring that both business and consumer interests are properly 157 52 94 id. assistant attorney general barnett wanted the hearings to legal conduct in which it would have engaged (the 'but-for' scenario)." id. at 39. the doj "does not 71 statements, the ftc found problems with two of the doj report's establish"63 99 a. the sherman powers and the court's application and he hoped that these 145 that are injured by illegal monopolistic conduct may use sherman section 2 62 doj "downplays the risks of under-enforcement."164 the court acknowledged that this monopolize by way of the vertical agreement was rendered moot because the interested in reducing competition in the aspen market over the long run by harming its smaller inclusive or vague decision, are deterred from undertaking such conduct by a fear of litigation." id. department's premises lead it to adopt law enforcement standards that would 148 antitrust litigation, the expenses of parties in litigation [including opportunitycosts] . . . and the legal and the cost of suit, including a reasonable attorney's fee"). currently, potential rival. section 2 more strictly and finds less conduct that violates this statute, the this trend exemplifies the court's concern to but the ftc may have a duty before the conduct rises to a full-blown sherman act violation. conduct and finds conduct anticompetitive when "(1) it has no procom- "monopolies have been appropriately criticized because they tend toward anticompetitive conduct. enforcement by the ftc would give the to launch a successful antitrust case against microsoft corp." id. her background maysuggest that "mak[ing] the prohibitions of the act . . . more complete and perfect by adjacent market it has entered). particular circumstances. an agreement of such a kind is unlawful per se.") (citations omitted). section 5 to "prevent persons, partnerships, or corporations . . . from using act, while providing direct statutory enforcement powers to the doj, plays id. at 136. 184 second, the ftc is (acknowledging the divergence of the doj and ftc policy prescriptions). 64 licensing agreement after a standard has been set will injure consumers and threaten or actually harbour, leibowitz, and rosch on the issuance of the section 2 report by the 98 maintenance of monopoly power element. in aspen skiing co. v. aspen the doj report suggests safe harbors for predatory pricing, bundled report."173 mainly on circumstances that impact competitive conditions.47 but congressionally mandated standard of fairness, it, like a agency resources, . . . expenses of the parties in litigation, . . . and the legal fees and other expenses however, it appears that the ftc enjoys its beat policing but in its explicit endorsement of conduct-specific tests and safe harbors, the while the holding in general foods corp. may cause pause when considering an (3) condemning assaults on the competitive process should the unilateral conduct "void" that worries the ftc is conduct that is in effect, the new standard will provide too high of a 112 in short, these remedies in standard oil co. of new jersey v. united states,44 chairman platt majoras' consumer focus at the in considering the difficult task of finding the balance between id. efficient competitor test;133 75 while sherman section 1 regulates concerted retail price, was a willful maintenance of monopoly power.54 circuit was concerned that "[s]uch a decision would permit the ftc to delve into, as the 2009] shiftingandshrinkingcommonground 583 this enforcement strategy does not eliminate a particular type of unilateral 169 procompetitive benefits from conduct deterred by the rules are sufficiently small." id. "court[s] nynex, 525 u.s. at 136. "the u.s. supreme court has declared that the welfare of consumers is the ftc does not believe consensus exists on this point and argues, report)4 have an affect on the ftc in the enforcement of unilateral conduct. if the sherman section 2 interpretations should be academic. but the sherman . . . convinced that no law could cover all possible violations of antitrust policy, and an agency with (2000). exclusive dealing context, the doj endorses a safe harbor where an exclusivity deal between dealer attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any outcomes. at the conclusion of the joint hearings, the doj singularly antitrust, 87 geo. l.j. 2079, 2094 (1999) (suggesting that in the "next-generation" scenario, "[t]hose views are significant to our understanding of the real-world implications of various business overall, the first four conduct that is a willful maintenance of monopoly power. in brooke group ready to fill any sherman act enforcement void that might be created if the purpose in respect to restraints of trade was prevention of diseased business monopolistic intent, "[the defendant's] reluctance to interconnect at the cost- 130 50 the court court found the vertical behavior lawful under sherman section 1.73 section 2 claims.8 private claims onto government actions,84 that eventually proves beneficial to business and consumers. the second circuit attempted to restrict the ftc's 176 the power based on the concern that the ftc would "substitute its own business of sherman section 2.199 established the violative per se rule to judge vertical price restraints and applying the rule of reason monopolist."72 hypothetical may help. consider a monopolist who ties a new product to a 152 the doj report recommends applying the disproportionality test to (2004); barnett speech, supra note 22, at 6; platt majoras speech, supra note 22, at 9. verizon commc'ns inc. v. law offices of curtis v. trinko, llp, 540 u.s. 398, 407 ftc statement, supra note 5, at 1 (citing reiter v. sonotone corp., 442 u.s. 330, 342 2. ftc 181 violation. the heart of the procedural approach is then to determine whether harvard double helix. see kovacic statement, supra note 5, at 1 n.1. substantially outweigh its likely procompetitive benefits." id. at 45. the doj "believes that, when a antitrust laws.100 letting the right hand know what the left hand's doing: the clash of the ftc's false division of the department of justice (doj) held joint hearings to establish 2 businesses on notice of anticompetitive conduct.30 identify a distinct product market in which it is efficient to offer [product 2] separately from id. presumably, this murky area of parties"). inherent focus on consumers would naturally result in a less stringent legal ii. a hearing that could have used more listening in analyzing sherman section 2 arises because "[i]t is not enough that a share of its requirements from it." id. at 131. shifting and shrinking common ground: anticompetitive conduct that violates the sherman act.101 183 jurisprudence and determining that ties should be analyzed using the disproportionality test). doj does not fully endorse any principle and concludes that "conduct- interests as the top concern for any new standards. and the ftc's desire to competitors as unilateral conduct that fulfills the willful acquisition or however, have rejected the gratz view and it is now recognized in line with the dissent of mr. grown into sherman act dimensions would, most likely do so if left unrestrained."). trade commission act (ftca section 5) derives ancillary powers from on the merits or does so in an unnecessarily restrictive way." id. at 605 n.32 (citing 3 phillip e. patrick bolton et al., predatory pricing: strategic theory and legal policy, 88 geo. l.j. 2239, the doj "believes that the standard predatory-pricing approach to single-product loyalty discounts lauren kearney peay, note, the cautionary tale of the failed 2002 ftc/doj merger and standard setting.108 id. at 16. in analyzing inevitable errors under this framework, the decision theory id. congress later supplemented ftca section 5 byadding the "unfair or id. § 45(m)(1)(a). maintenance of monopoly power element must be "distinguished from doj report, supra note 4, at 8. eroding its monopolistic position"); eastman kodak co. v. s. photo materials co., 273 u.s. 359, 102 assistant attorney general barnett, however, focused on competition its overstatement of the "level of legal, economic, and academic consensus general of the antitrust division, thomas o. barnett, and ftc chairman (4) (a) if the answer to (3) is "no," then the conduct ought not (weyerhaeuser, nynex, trinko, and linkline communications) were agencies in an attempt to "help define the boundaries between single-firm unless there is a sufficient demand for the purchase of [product 2] separate from hospital services to wash. post, mar. 1, 1978, at a22; see also tracy westen, government regulation of food from benefits that accrue from diminished competition)." brief of the united states & the federal (or agency), but also the loss of procompetitive conduct by other actors that, due to an overly up to the legislative purpose that inspired ftca section 5.185 15 u.s.c. § 45(a)(2) (2000). conduct may be an "unfair method of competition" regardless of the using section 2 to ensure a "competitive kingdom" 2 (june 20, 2006) [hereinafter platt substantially disproportionate to those benefits.180 31 (2004). iii. the sherman act, the doj, and the ftc (2006). the doj "does not believe [that the effects-balancing test] should be the general test for demonstration. in step one, he determines that an invitation to collude does not violate the antitrust 2 hearings produced a unilateral report prepared by the doj the (doj interpretations have oscillated over time. at times, the ftc's interpretations "acquisition or maintenance" prong in grinnell. id. (quoting h.r. rep. no. 1613, at 3 (1937)). 138 as well as being vulnerable to actions initiated by private parties and difficult. id. at 1515-16. miller concludes that because collusion could result if news american [but] it believes that the test may sometimes be useful in identifying certain exclusionary conduct." standard for sherman section 2. furthermore, the ftc's antitrust enforce- standard incorrectly relied on an overstated consensus among academics 375 (1927) (stating that defendant's refusal to sell tended to indicate a purpose to monopolize). 596 delaware journal of corporate law [vol. 34 unlike the sherman act, prosecution under and immediately reduces the parties' expenses as compared to a sherman id. antitrust enforcement: follow-on and independently initiated cases compared, 74 geo. l.j. 2009] shiftingandshrinkingcommonground 589 recently proposed procedural approach.177 implement a single, unitary firm's policies does not raise the antitrust dangers that [section] 1 was defensive leveraging in antitrust inhibits competition). being pursued by either agency. to be condemned as an antitrust violation. the doj then applies these prefer- and nowhere purports to confer upon private individuals, either consumers or business competitors, a 13. communications, however, and its other recent sherman section 2 decisions should act to temper (2) bundled discounting;152 28 jurisprudence, their focus on the course of that development was not shared. id. at 135 ("[p]recedent limits the per se rule in the boycott context to cases involving id. at 17-18. an application of "per se illegality [is] not designed to achieve perfection." (2) chris bernard and (5) the disproportionality test.134 472 u.s. 585, 595 & n.19 (1985). in order to meet this element the conduct must "not administrable rules167 under common law, were undue restraints on trade and contracts and 126 substantial, and prison is a much stiffer penalty than a cease and desist conduct's anticompetitive status under the sherman act. 128 (1998). see consumer benefits and harms: how best to distinguish aggressive pro-consumer stance of "consistently emphasiz[ing] the potential dangers of overdeter- the l. rev. 79 (2006) (discussing the ftc's proposal to restrict advertising to children). id. at 12 (quoting frank h. easterbrook, the limits of antitrust, 63 tex. l. rev. 1, 5 meaningful part in section 2 enforcement."155 see complaint at 4, in re valassis commc'ns, inc., no. c-4160, 2006 wl 1367833 effect [sic] on prices and thereby prevent consumer harm." steven c. salop, exclusionary conduct, the ftc does not enforce antitrust violations directly through the sherman act, the federal trade commission (ftc) and the antitrust while each category of conduct may to restrain trade is an unfair method of competition even though the selfsame conduct may also (4) protection of competition, not competitors;116 conduct that is actually anticompetitive would pass the disproportionality have been extremely broad and lower courts have attempted to rein in the future anticompetitive conduct related to the ftc enforcement might be the panel hearings began with common ground and consensus section 2 of the sherman act 1 (2008), http://www.ftc.gov/os/2008/09/080908section2stmt eliminating, disciplining, or otherwise inhibiting the competitive conduct of a rival that any category of conduct can be excluded from the scope of [s]ection 2 have been met with mixed results.109 the doj appeared focused explicitly on influencing the development of but the ftc does not derive its antitrust enforcement powers directly from see supra note 90 and accompanying text. with the theoretical and practical similarities of predatory pricing and predatorybidding convince us 163 134 see ftc statement, supra note 5, at 1; see also kovacic statement, supra note 5 increases its standard, the ftc naturally will shift its enforcement regime in provid[e] businesses with greater certainty."139 582 delaware journal of corporate law [vol. 34 role to play in the free-market system. but despite this shared opinion, there an early interpretation of ftca section 5, justice brandeis, in protected. the two agencies' standards are closely related and if the doj doj report, supra note 4, at 36-38. this test is also called the consumer welfare effect 5 the ftc is attempting to expand its ftca section 5 authorityto include acts too incipient a violation based on the heightened standard. with the ftc's 193 an appropriate measure of its rival's costs"61 weyerhaeuser co. v. 65 attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any id. at 13. 594 delaware journal of corporate law [vol. 34 conduct is highly likely to bring consumer-welfare benefits and the threat of anticompetitive harm is 43 in other words, this consensus on a number of principles and . . . how to approach a significant id. see barnett speech, supra note 22, at 2 (discussing as one of two reasons for the violation, was an 'unfair method of competition'"). in later interpretations of "unfair methods of competition," the court standard may eventually fulfill the disproportionality test. but there is a of the competitive process the equally efficient competitor test requires the plaintiff to show that "'the challenged id. at 325 ("the general theoretical similarities of monopoly and monopsony combined refusal to deal." id. during this period, the ftc was publicly humiliated in its attempt to interpret singularly presented recommendations based on the hearing's findings. supplier and distributor that kept the plaintiff out of the market, ultimately difficulty in defining remedies for alleged violations, but it "do[es] not agree because "often the same conduct can both generate efficiencies and exclude brook, "the gale of creative destruction produces victims before it produces for a corporation, up to $100 million in fines.82 given that the ftc does not have statutory authority to directly see infra part iii.c.2. 2009] shiftingandshrinkingcommonground 587 pursuit of standard setting and initiation to collude actions). 97 the ftc's non-endorsement of the doj's report on single-firm desirable in the abstract, [but] the benefits of clarity must be balanced against the benefits of monopsony combined with the theoretical and practical similarities of predatory pricing and decisions and the views of a broad cross-section of commentators--exists on 91 68 doj report, supra note 4, at 11-12. distinguished aspen skiing by noting that the defendant in aspen skiing enforcement is viewed as a continuum, the doj's heightened standard will against vertical price restraints, by replacing a nearly100-year-old precedent in critiquing the doj report's legal standards, the ftc states, "the standard articulated in the disproportionality test. this potential "void" highlands skiing corp.,53 follow-on actions.188 144 requirement: (1) tying;151 see nynex corp. v. discon, inc., 525 u.s. 128, 133 (1998) ("[c]ertain kinds of standard and finds that "exclusionary conduct violates the antitrust laws if it reduces competition id. at 129. the doj essentially eliminates this conduct as anticompetitive based on its another is contingent upon that other party (1) dealing with it exclusively or (2) purchasing a large antitrust law is the area that the ftc/doj joint hearings were intended to as will be demonstrated below, the ftc's unilateral conduct and department of justice's enforcement powers the decision in dr. miles medical co. v. john d. park & sons co., 220 u.s. 373 (1911), that not an antitrust violation per se, and assume the tied product meets the separate product test. opening statements of the hearings. the ftc explicitly placed consumers' 151 the same direction. but, arguably, this shift has detrimentally squeezed under section 2 of the sherman act (2008), http://www.usdoj.gov/atr/public/reports/236 that "[t]he mere possession of monopoly power, and the concomitant and (5) exclusive it is worth remembering that in early antitrust cases, the court was concerned with the the penalties are not as draconian for ftca section 5 and overruled a violative per se rule and the doj alleges that the antitrust law.28 second, in barnett speech, supra note 22, at 2. in the merger context, assistant attorneygeneral negatives."137 are less punitive than those imposed by the sherman act. 192 damages, a company pursued by the doj in violation of the sherman section standard will correspondingly heighten the ftc's standard. in order to (1957), "no set of facts" pleading standard with the higher "plausibility" pleading standard for limited to determining whether the commission's decision 'has warrant in the record and a on [its section 2] claim without prevailing on its [section] 1 claim."). enforce the federal antitrust laws."39 conduct under sherman section 2 could have been expected. despite the reduction of sherman section 1 collaborative activity. see supra note 73 and accompanying text. official non-endorsement and critique of the doj report.157 604 delaware journal of corporate law [vol. 34 103 practices and their potential impact on competition"). competition, monopoly efficiency, and agency enforcement before the passage of the ftca). see leegin creative leather prods., inc. v. psks, inc., 551 u.s. 877 (2007) (overruling levy fines after anticompetitive conduct has occurred. if the agencychooses 26 accepts the invitation, and this conduct would violate antitrust laws, that "the commission was right id. at 9. 253 u.s. 421 (1920). negotiated data solutions, llc, no. c-4234 (f.t.c. sept. 22, 2008) (alleging that a breach of a i. introduction court adopts the doj's proposed test, this heightened standard will see id. at 131-41 (discussing the development of exclusive dealing jurisprudence and did not develop this standard on its own. the doj cites a amici curiae brief before the law, with the merchant or manufacturer injured by the unfair enforcement power is not bound by any interpretation of sherman section 2. the ftc's use of ftca section 5 would meet manyof these goals. sherman section 2.156 41 able to bring forth a cease and desist order,87 common goals, the outcome of the hearings revealed an underlying differ- in order to conceptually grapple with this problem, a concrete violation? question 3 for conduct left unchecked--will eventually result in an antitrust principles state the necessary elements in a sherman act claim and provide a 600 delaware journal of corporate law [vol. 34 antitrust l.j. 871 (2005) (discussing the historical context at the creation of the ftc and the sherman section 2 greatly affects the ftc. if the doj interprets sherman the market.'" id. at 11 (quoting spectrum sports, 506 u.s. at 458). 158 id. satisfy the conduct-specific safe harbor requirement must be analyzed bythe where the reach of ftca section 5 seems to apply.176 including reduced innovation--achieved through the exclusion of a rival or produce anticompetitive effects). the result "suggests there may be renewed enforcement in this area"). 80 affects the ftc's scope of enforcement. specifically, a heightened doj 110 in echoing justice scalia's characteri- commission of such acts."). and customer results in a rival being unable to deal with less than thirty percent of the market. id. at in arriving at these principles, the report makes an in order to properly consider the deterrence concern, courts have 51 the doj is able to pursue anticompetitive 141 in 2006, the ftc and the doj began a series of hearings on unilateral kovacic.pdf [hereinafter kovacic statement]. id. edu/pubs/consumer/general/gen03.shtm (last visited apr. 14, 2009). in this interpretation, 1 id. at 324 (citing steven c. salop, anticompetitive overbuying by power buyers, 72 courts with adequate powers to hit at every trade practice, then existing or the doj report proposes a disproportionality standard that raises the 12 antitrust division share a common goal of protecting competition and promoting consumer welfare against other equally significant stakeholders."159 attempt to reduce the ftc's authority, the supreme court restated its continues by stating that "rules that are overinclusive . . . will sacrifice those benefits not only in this note argues that this divergence should be expected as the two (2) the willful acquisition or maintenance of that power."51 see sperry & hutchinson, 405 u.s. at 244. the monopolist may also leverage its organization standardized technologies covered by those interests"). but see complaint at 5-7, in re standards for certain types of unilateral conduct. in certain contexts, the court has considered refusals to deal with this is the disproportionality standard. see supra note 154 and accompanying text. decisis, no matter the benefits.'" id. (quoting easterbrook, supra note 27, at 2). id. at 571. rationale for applying the law. the next three principles attempt to isolate 2009] shiftingandshrinkingcommonground 603 chairman platt majoras 132 200 the believes that the rule of reason standard "already poses a significant hurdle sherman act."169 127 verizon commc'ns inc. v. law offices of curtis v. trinko, llp, 540 u.s. 398, 409 by adding see u.s. dep't of justice, competition and monopoly: single-firm conduct recalibrating the federal trade commission's restraints are almost always evaluated under a rule of reason-type approach where the courts weigh see supra notes 11-15 and accompanying text. 118 this high unilateral conduct is illegal only under [section] 2 and not under [section] 1. barnett noted how the courts reliance on the doj's merger guidelines have "increased transparency clearance accord, 60 vand. l. rev. 1307, 1308 (2007). realm, this would include conduct that is condemned as anticompetitive or harmful to consumers conduct realm. congressional motivation was to "make[] the consumer . . . of equal concern, this language, the legislature explicitly "charged the ftc with protecting id. at 139-40 ("we do not see, on the basis of the facts alleged, how discon could succeed and punishments than if found guilty of a sherman section 2 violation. as see press release, supra note 2. president obama has recently appointed christine trade commission as amici curiae supporting petitioner at 14, verizon comm'cs inc. v. law combination to raise it, and the result in any event is unfortunate for the country."). but that the id. therefore, when a potential violation of the sherman act occurs, both agencies may be on alert id. at 17. the rule is, however, "warranted so long as false positives are sufficiently rare and would promote, would be "undistorted competition, driven by 'king and it is these concerns that the doj report spends the most time addressing.123 to liability."171 act and the clayton act--to stop in their incipiency acts and practices which, when full blown, on the scales in favor of firms with monopoly or near-monopoly power and well as an appeal to continue the direction of its sherman section 2 united states v. grinnell corp., 384 u.s. 563, 570-71 (1966). in discussing the third principle, the doj follows the interpretation in spectrum sports, those powers.174 fraction of the single-firm conduct we encounter."31 conduct is actually anticompetitive, it stands a greater chance of eventually expansion of ftca section 5 power, it must be emphasized that the ftc appears to be attempting to id. at 45. the court eventually adopted justice the doj antitrust division enforces unilateral monopoly conduct 15 states v. microsoft corp., 253 f.3d 34, 86 (d.c. cir. 2001) (quoting jefferson parish hosp. dist. test specifically for exclusivity arrangements). ftc v. ind. fed'n of dentists, 476 u.s. 447, 454 (1986) (citations omitted). gibson, 355 u.s. 41 (1957)); see also supra note 11 and accompanying text. see philippa strum, brandeis: beyond progressivism 87 (1993). brandeis "was doj's report interpreting unilateral firm conduct through a historical perspective and the chicago- context, the burden is raised to meet the first element of the brooke group to obtain treble damages.83 to condemn the action as a pure section 5 violation." id. at 1516. full-blown sherman act violation, the sherman section 2 standard is an 129 see rambus inc. v. ftc, 522 f.3d 456, 463 (d.c. cir. 2008) (overturning the ftc's correspondingly apply different legal standards in determining whether the court has also singled out predatory pricing58 and still be eligible for treble violations. the ftc goes a step further and interprets the doj's dispro- expand its ftca section 5 power. see supra notes 107-09 and accompanying text. this in the doj report, there is a focus on "enforcement costs" that include "judicial or anticompetitive effects is anticompetitive under section 2 if its likely anticompetitive harms identified to date for evaluating conduct under section 2." id. at 46. but enforcement under ftca section 5 also reaches conduct that does not become antitrust violations. see id. in coming to this determination the court states: 106 the hearings as a "means, not the end."24 enforcement takes its lead from sherman section 2 jurisprudence. but its with the rule of reason analysis.79 finding that "rambus engaged in exclusionary conduct consisting of misrepresentations, omissions, efficient.'" id. at 43 (quoting richard a. posner, antitrust law 194-95 (2d ed. 2001)). the the ftc at a cost-based price.56 549 u.s. 312 (2007). violation. therefore, the specific unilateral conduct will not be barred by c. the agencies' enforcement powers under sherman section 2 2242-43 (2000). this newly synthesized rule would affect interpretations 10 by the court.81 efficient legal regime will consider the effects of false positives, false negatives, (1897) ("[i]t is not material that the price of an article may be lowered. it is in the power of the this note will argue that the id. or potential rival. stated more precisely, a predatory price is a price that is profit- 21 by making a conspiracy to monopolize unlawful, [section] 2 does reach both 172 regarding merger-enforcement policy and improved merger-enforcement practice." id. at 3. it stare decisis under the sherman act. this reduces the risk of false-positives (suggesting that a firm may be able to use its monopoly power to eliminate competition in an methods of a dishonest competitor."99 . . . encompass[es] . . . practices that violate the sherman act and the other antitrust laws"). chairman platt majoras advocated the above stated goals with a focus furthermore, individuals 2009] shiftingandshrinkingcommonground 607 ask: see trinko, 540 u.s. at 414. 2009] shiftingandshrinkingcommonground 591 the court's heightened sherman act legal standard has made it more the court anticipated this gap filling provision would prohibit "attempt[s] to 56 businesses from the working of the market; [but rather] it is to protect the public from the failure of in the predatory pricing context, the doj recognizes above-cost pricing as a safe harbor. see supra notes 91-99 and accompanying text. based on this statement, the ftc appears ready to apply its 194 offices of curtis v. trinko, llp, 540 u.s. 398 (2004) (no. 02-682); see also supra notes 53-57 (emphasis added). in contrast, sherman section 2 states, "every person who shall monopolize, or in 70 joint ticket agreement with a competitor, and later would not re-establish the 588 delaware journal of corporate law [vol. 34 (3) bundled discounts and single-product loyalty discounts;144 verizon commun- 18 the interests of consumers were not adequately heard."158 following the unilateral release of the doj report, the ftc, in a statement antitrust jurisprudence. based on the court's constriction of sherman ftca section 5 encompasses sherman act violations.110 profitable only because of the added market power the predator gains from allows the each raised calculates the cost of false positives as "not just the costs associated with the parties before the court guidelines for determining when the conduct creates anticompetitive sherman section 2 standard does not swallow ftca section 5's mandate decided without dissent.74 this heightened standard is in line with the united states supreme jurisprudence by separately quoting justice scalia's explanation in trinko the agencies wanted to examine the current state of sherman but the court there is minimal to no effect on consumer prices in the predatory bidding and "the costs of an erroneous finding of liability are high."64 and more active enforcement of the antitrust laws in general. the court's recent decision in linkline the punishment for a violation is severe--a violation is see infra part iv. these firms' interests ahead of the interests of consumers."). abstract the doj would not third, the ftc 13 power narrowly. in a waning period, the ftc did not perceive that ftca "[t]he conduct of a single firm is governed by [section] 2 alone and 20 "exclusive dealing describes an arrangement wherebyone party's willingness to deal with with rivals jurisprudence and determining that the conduct should not play a meaningful part of § 45(a)(1) (2000); see also infra part iii.c.2 (discussing ftc's regulation powers). interpreted sherman section 1 to proscribe contracts or combinations, which, doj report also recognizes that conduct-specific tests are not available for 153 has adopted the congressionally recognized concern for consumers. in justice brandeis in gratz that the commission has broad powers to declare trade practices unfair."). jurisprudence. department of justice and federal trade commission proceedings relating to in effect, the court limited any extension of a refusal to deal be condemned. reasonably possible. id. at 101. and "[w]here bundle-to-bundle competition is not reasonably because there is no opportunityfor follow-on actions, overdeterrence.127 should the ftc? the tie does not currently violate antitrust laws, but if the transcript: workshop on section 5 of the ftc act as a competition statute, held by the federal 25 meeting the separate product test "does not turn 'on the functional relation between them.'" united whether a restrictive practice should be prohibited as imposing an if the courts adopt the disproportionality test, the ftc must decide 77 in analyzing the evolution of sherman section 2 standards and monopolization without conspiracy is unlawful under [section] 2, but restraint of to enforce after the fact, there is the potential that the ftc's niche will be 147 see, e.g., somnath bhattacharyya, u.s. philips corp. v. international trade commission: seeking a standard, the ftc also takes aim at other recommendations made in the doj 122 test. sherman act (sherman section 2). the ftc did not endorse the doj's new 105 detrimental to the consumer.182 34 196 these same concerns were evident during the discounting, and exclusive dealing.147 by a direct sherman act violation. if conduct is deemed "unfair," the ftc is and hoped 189 had lower expectations. she realized that a consensus on a universal test 166 product of the hearings to help develop the law in sherman section 2 17 see doj report, supra note 4, at 15-16 ("[d]ecision theory. . . articulates a process for a new antitrust agency94 recommends that "when a conduct-specific test is not utilized, the dispro- 54 example, in the future, rivals in the tied market may exit or the monopolist's prove anticompetitive conduct, the doj's proposed disproportionality 111 unfair method of competition before the conduct rises to the type of practices that the commission determines are against public policyfor other tying;143 this is a metaphor that the ftc and members of the public use to describe the ftc. see ftc statement, supra note 5, at 3. not stopped in its incipient stages. the court type i errors are false positives. doj report, supra note 4, at 16. in the antitrust 59 fees and other expenses incurred by firms in complying with the law." id. by the sherman act. third, the problems of type ii errors are reduced.196 agencies and courts, and reduce the risk of erroneous determinations."140 applicable because the monopoly power was not illegal under sherman id. section 2 jurisprudence in order to help courts and businesses assess the may be anticompetitive under the second principle.122 designed to police." copperweld, 467 u.s. at 769. ftc statement, supra note 5, at 1 ("[t]he department's report is chiefly concerned when it actually is not. see supra note 136. 9 section2.pdf ("the ftc and the antitrust division have the responsibilityto ensure that competition the "unfair methods of competition." in this legal regime, some conduct that the court has defined a sherman section 2 violation as requiring two horizontal agreements among direct competitors."). chairman kovacic did not join this statement but rather penned his own critique of the id. at 608-10. the defendant could not persuade the jury that refusing the joint ticket order. the doj contends that "[a]t almost every turn, the department . . . place[s] a thumb stances." doj report, supra note 4, at 90. that qualifies as an incipient violation of the antitrust laws.175 primary goal of the antitrust laws" requires it to diligentlyexplore the fringes id. at 15-18. areeda & donald f. turner, antitrust law 78 (1978)). id. at 1515. miller runs through the proposed procedural approach using valassis as a competition law and the treatment of dominant firms: comments on the use monopoly power in one market as "leverage power in other markets." id. at 3; see also supra 22 economic theories and proof of what is beneficial."27 107 cost prices."62 123 id. at 17. the doj report acknowledges that because of the precedent values of stare latest advances in economic thinking." id. a court would then wrongfully condemn a beneficial id. all types of unilateral conduct. in light of this limitation, the doj firm conduct under section 2. consumers. the court has recently stated that it is permissible for pacific bell telephone co. v. linkline communications, inc.15 44 unilateral, unconditional refusals to deal with rivals;145 2: interpretations of section 5"). sherman act. the court has been consistent in its aim to reduce catching antitrust laws--a "no" response to question 1, and subsequent move to in order to expeditiously and predictably handle matters, suits and influence both perceptions of the merits of the subsequent litigation and the conduct of the see thomas e. kauper & edward a. snyder, an inquiry into the efficiency of private second, the ftc 142 prudently develop the law suggests caution in stating consensus between the consumer victims appear a necessary means to reach a competitive process 109 be what 'attracts business acumen in the first place; it induces risk taking that produces innovation reliance on sherman section 2 in mind, we now turn to the doj report. deemed a felony and carries a punishment of up to ten years in prison and, conduct, "that a rule of per se illegality . . . is misguided because tying has the potential to help 160 cont'l t.v., inc. v. gte sylvania inc., 433 u.s. 36, 49 (1977). anticompetitive and harms consumers. see supra note 136. fines would aim to achieve this goal. see supra notes 187-90 and accompanying text. still be deemed anticompetitive, even if it can satisfy the disproportionality iv. the doj report specific tests and . . . safe harbors enable more effective enforcement [and] before this 608 delaware journal of corporate law [vol. 34 191 id. at 15; see also verizon commc'ns inc. v. law offices of curtis v. trinko, llp, 540 section 1. required to bring a monopoly claim,78 only (1) tend[] to impair the opportunities of rivals, but also (2) either does not further competition id. at 2; see also doj report supra, note 4, at 14 ("being able to reap the gains from a id. at 46. section 2).1 iowa l. rev. 1485 (2008) (suggesting a procedural approach for ftca section 5 determinations conditions, not cure."93 disagrees with the doj's reliance on the "'costs of administration' as a factor the no-economic-sense test is similar to the profit-sacrifice test and "compar[es] the non- conduct is anticompetitive, the agencies may also subject violators to rence."128 see thomas o. barnett, assistant attorney gen., antitrust div., the gales methods of competition" standard is clearly related to the sherman section 2 ftc's area of enforcement will shift. enforcement under ftca section 5 markets unburdened by anticompetitive conduct and government-imposed restrictions."). test, it is important to note that the doj "believes that antitrust liability for sherman section 2 realm, decision theory focuses on "the judicial or agency resources devoted to at the beginning of the hearings, both agency representatives showed interests of business over those of consumers. anticompetitive effects of predatory pricing are higher prices and reduced output-- sherman act. rather, the ftc is granted its regulation powers under ftca id. determining that predatory pricing may be analyzed using conduct-specific tests). ftc statement, supra note 5, at 1. of its power under the "unfair methods of competition" rubric.102 that went unendorsed by the ftc.5 courts tend conduct under sherman section 2. analyzing these tests and promoting 45 (quoting matsushita elec. indus. co. v. zenith radio corp., 475 u.s. 574, 590-91 (1986)). sperry & hutchinson,103 119 growth or development as a consequence of a superior product, business commission act, 73 fed. reg. 50,818, 50,818 (aug. 28, 2008). b. the court's current interpretations of sherman section 2 queen consumer.'"25 the ftc and the doj antitrust division "share dual jurisdiction to unreasonable restraint on competition."46 (1984)). 101 common legal standards is one of the doj report's main purposes.129 the ftc's overarching duty to consumers17 violations. under ftca section 5, violations are subject to a maximum civil see id. at 119-29 (discussing the development of unilateral, unconditional refusals to deal make it nearly impossible to prosecute a case under [s]ection 2 of the common purpose: to provide assistance to courts in interpreting unilateral b. the ftc's critical response 199 [that] minimize . . . inevitable error and enforcement costs, [by] considering has a number of advantages, including its administrability, clarity, and reduced risk of chilling 2009] shiftingandshrinkingcommonground 597 id. at 10-11. scrutinized conduct is more profitable in the short run than any other conduct the firm could have the ftc's belief that children and was condemned as a "national nanny." see editorial, the ftc as national nanny, 171 determining when actual or probable harm to competition is shown, and when it is established, it laws, and then moves to the third question and concedes that determining this answer is more commission act reveal an abiding purpose to vest both the commission and the the incentive structure that competitive markets rely upon to produce innovation"). the doj report ment powers derive from "unfair methods of competition" under ftca in nynex, the court allowed consumers' telephone service rates to increase based on a the court reasoned that, while in aspen skiing it that they started from a common point in their interpretation of antitrust although it is a monopolist and the challenged practice exclusionary, the practice is, on balance, tation of sherman section 2, the ftc is fulfilling its own legislative duty the sherman act,186 exclusionary profits from the conduct to the profits the firm would have earned from alternative, 116 conduct that is legal and conduct that is illegal under current antitrust the prohibition against attempted monopolization in the sherman act by condemning less offensive 2009] shiftingandshrinkingcommonground 605 within this shared jurisdiction, the stated above, companies that are found in violation of sherman antitrust laws whether it will serve as the cop on the beat, and rely on its ability to deter followed in modern ftca section 5 jurisprudence.96 in expanding the scope of the brooke group test, the court reasoned that "a agencies derive their antitrust enforcement powers from different legislative he will not purchase that product from any other supplier." n. pac. ry. co. v. united states, 356 the legal standard previously applied for the particular type of conduct or competition . . . and unfair or deceptive acts or practices in or affecting commerce." 15 u.s.c. should be filled by the ftc's enforcement powers under ftca section 5. 7 155 reduced.195 given that competitive conduct and exclusionary conduct often look alike. indeed, possible, the [doj] believes that a discount-allocation safe harbor is appropriate." id. at 102. in the agreements will so often prove so harmful to competition and so rarely prove justified that the order to fully protect consumers. these predatory pricing is defined in economic terms as a price reduction that is it is very easy to conceive facts that yield an affirmative response. for entrance may keep those competitors inefficiently small.181 significant in the though the differences were subtle, the distinctions at the opening of released a report recommending a heightened standard to find single-firm 83 see supra notes 124-28 and accompanying text. she will lead the doj's antitrust division to pursue a more liberal construction of sherman section 2 conduct specific tests and safe harbors "are most administrable by the (b) if the answer to (3) is "yes," then the conduct ought to and (7) order.191 corp. v. discon, inc., 525 u.s. 128, 136 (1998). considering the administrability principle, the doj report reviews five ftc follows this path, there is no genuine reason for the ftc to enforce dealing.146 or employees of the same company. but it is perfectly plain that an internal 'agreement' to product in which she already maintains a monopolyin the relevant market.179 for purposes of this analysis, we will operate in a post-microsoft world, where tying is conduct in violation of antitrust laws. but because section 5 of the federal refused to sell at retail price, whereas the defendant in trinko refused to sell pursue this conduct because it does not violate the disproportionalitytest, but or affecting commerce."85 and per 178 buyer's purchase of two or more different products, including bundled rebates where the amount of id. 149 are liable for treble damages that may reach $100 million and felony jail 120 [hereinafter ftc statement];william e. kovacic, fed. trade comm'n, modern u.s. considers "conduct that potentially has both procompetitive and anticompet- or serve as an enforcement agency, waiting to in applying its ftca section 5 powers, the ftc may consider a because the court assumes that (3) if this conduct goes unchecked, will it result in an antitrust neither automatically nor presumptively illegal." id. the difference in monetary liability between the two statutes is enforcement, the doj felt that "a consensus--as reflected in both judicial (discussing the aspen skiing test). press release, supra note 2. the rule of reason and disproportionalitytest will not be a full-blown antitrust of unilateral conduct might cause harm to consumers.3 enforcement philosophies were exposed to the public. the sherman section "false positive" conduct.75 under this act, the ftc is empowered to pursue incipient sherman act hurdle for enforcement agencies and consumers to pursue potential antitrust all circumstances may seem to allow defendants broad discretion to show id. at 12-13. the united states supreme court's recent interpretations of section 2 of 117 in interpreting sherman section 2, the court viewed the provision as 581 practice, and firms that use the condemned practice would "'face[] sanctions in the name of stare standards. this provides more incentive for the ftc to continue the current he appeared to place effective and reasonable law enforcement, lest the interests of consumers be compromised." id.