- 1 Fines
- 2 Prison Sentences
- 3 Divestiture
- 4 3rd Party Initiation =
- 5 Remedies to 3rd parties
- 6 3rd party rights
- 7 Voluntary
- 8 Post-merger
- 9 Merger assessment - dominance
- 10 Merger assessment - restriction of competition
- 11 Public Interest (Pro D)
- 12 Public Interest (Pro Auth.)
- 13 Other
- 14 Efficiency Defense
- 15 Limits Access
- 16 Abusive Acts
- 17 Predatory Pricing
- 18 The books
- 19 Output Restraint
- 20 Supply Refusal
- 21 Extraterritoriality
- 22 Dominance - Obstacles to entry
- 23 Price Setting
- 24 Discriminatory Pricing
- 25 Resale Price Maintenance
- 26 Dominance - efficiency
- 27 RTP - market division
- 28 RTP - Market Sharing
- 29 RTP - eliminating competitors
Should we add language to limit the fines for only the prohibited acts themselves?
Hylton's 3 cases:
- Violate the prohibitions of the law: Easy. Counts.
- Violate an order of the commission to stop activity. Gray area, but it counts.
- Violating rules of procedure. Defendant doesn't cooperate with proceedings - doesn't hand-over evidence, perjures self, etc. Doesn't count.
Separating fines for procedural issues from violations of the actual injunction. Inclined to allow for fines where the fine is for violating an injunction that forces the law to take effect. Three categories: (1) violating rules of procedure (presenting evidence, perjury, etc); (2) violating an injunction to follow the rules of the statute; and (3) violating a direct provision of the statute. We code (2) and (3) as a one. "Penalities for violating an injunction prohibiting prohibited conduct as a one." Same rules apply for prison sentences.
Add language to limit the prison sentence to not include general perjury type stuff.
Hylton: See fines discussion above.
Include text for mergers.
Working version: "The law allows the selling of assets or division of the company in response to certain violations. Or the law allows divestiture specifically in the merger context. In that case, the law must allow a merger to be conditioned on certain acts and must allow the agency to force those acts to occur if the firm does not."
"The law authorizes the commission or court to require division of the company or selling of assets in response to certain violations."
Easy case: divestiture for some particular prohibition of the statute.
Hard case: merger statutes. There must be some language in the law that gives the commission the power to unwind or split-up a company. This power must be more than just a power to fine or imprison, they must be able to compel the break-up of the company. Everything hinges on what kind of power the commission has in these situations.
For mergers, there must be language in the statute that the commission can unwind or break up a merged firm. They have to be able to compel you to break up. A comment is included where divestiture only exists in the merger context.
3rd Party Initiation =
Comments: A complaint to the competition agency isn't enough, it must commence proceedings. In other words, the law must allow for more than merely a "tip line" to the agency. The complaint must "compel" an investigation.
Hylton: Keep "tip line" phrase in there. Tip line not enough. "Instead, there must be a formal process for 3rd parties to initiate an investigation or hearing, even if the commission retains the discretion to proceed with the investigation or hearing." Must be a formal process to initiate the proceedings.
There must be some formal process to get the ball rolling. It is insufficient for the statute to merely provide a tipline.
Remedies to 3rd parties
Can include money or an injunction. Also includes situations where the statute says a 3rd party may seek compensation from a party in violation of the statute.
Hylton: This second sentence is good.
Okay for the compensation suit to come after the official gov't suit, that's how it works in the US.
3rd party rights
We're including appeals by affected parties.
Hylton: This works.
Case where there's 3rd party right to initiate but no right in proceedings: 3rd party complains, ball starts rolling with enforcement agency, then 3rd party backs-out and doesn't do a thing.
3 possible cases:
- 3rd party has right to initiate proceeding, but no right to participate in it
- 3rd party can initiate AND participate. Count it.
- 3rd party can't initiate proceeding, but once it starts, you can participate. Count it.
Include in the comments the different types of systems that exist. (1) where the 3rd may initiate but has no rights to participate; (2) where the 3rd party may both initiation and participate in the proceedings; (3) where the 3rd party cannot initiate but may participate once it begins.
If voluntary, then default of post-merger
Hylton: If voluntary, then post-merger.
Remove "and then often has the power to invalidate the completed merger"
Hylton: Cut this language out.
Merger assessment - dominance
Assessing only dominance or dominance with abusive acts? In other words, if two firms merge to have 90% market share, in the absence of any abuse, will that be banned under "dominance."
Hylton: This is an assessment of the sheer size of the resulting firm, not abusive acts.
Merger assessment - restriction of competition
Umbrella term, includes barrier to entry.
Hylton: This is an umbrella term. Current definition is OK. Keep the language of this definition as general as possible. Example of a 3-firm market where 1 firm buys a second, would likely count.
Public Interest (Pro D)
New working definition - "The Commission or Council considers whether an otherwise impermissible merger may be allowed because it is in the public interest. Public interest is linked to social welfare, and not to market efficiency. For example, this would include international competitiveness, national champions, employment markets, and promoting minority ownership."
What about lower consumer prices?
Hylton: Lowering prices usually counts as efficiency. Efficiency also may increase product surplus in market.
This definition is for things that increase public welfare but have less to do with the market. These are externalities that are good for people: increasing minority ownership, employment benefits, improves the environment, etc.
Definition is good, add environment to the list
Efficiency, on the other hand, are things that are internal to the market.
National champion counts here, too.
Clear market impact for efficiency.
Public Interest (Pro Auth.)
More examples of where this would be used.
Hylton: Otherwise acceptable mergers that are unacceptable because of some gov't interest.
- National security
So far, this definition only includes business failure defenses.
Hylton: Keep "Other," and have a comment that this is only for "business failure" at the moment. If other people find new things that don't fit elsewhere, toss them under this category.
Though business failure is a type of restriction of competition, they are mutually exclusive in how we code them. A coder must look for both separately in the statute.
Say in the definition that the only defense we've found under "other" is business failure, but a future researcher may find more.
- add business failure to US chart, Brown Shoe Co. vs U.S., 370 US 294 1962
Should we include technological developments to this definition?
Hylton: Depends on the context. If they're talking about the market, make it efficiency. If they're talking about benefits to the public at-large, outside the market, then mark it public interest.
Anything that increases the product supply, lowers prices, increases value of product, etc.
- Efficiency has to do with benefits to market
- Public interest 9pro-d) is benefits to people, overall welfare
- Idea for other: Other would include anything that effects a transfer of wealth that, for some reason, society wants to see. Like improving the welfare of a small group. Minority ownership or participation of women in the economy might be listed here because it is a benefit to one particular group and not to the society as a whole.
"to market efficiency sum of producer consumer surplus"
Efficiency is everything that affects the market. Public interest is everything that affects the social welfare, not tied to the market. Other is business failure....
Looking for quota language or output limits.
A single dominant firm may not limit the supply of goods to the market or in other ways restrict access to the market by consumers or competitors.
Remove the "or competitors."
Hylton: Remove "competitors." This is limiting access to downstream people like purchasers or consumers to artificially keep prices high.
Limiting access to competitors counts as eliminating competitors / obstacle to entry.
Remove "or competitors" Limiting access to consumers "or purchasers." (make it clear that the definition includes companies that are downstream)
Wouldn't this always be coded as a one if there's anything there?
Hylton: This is something we'll keep as redundant? Mark it as a "1" when any other abusive act is coded under dominance?
The way to do this is to code a "1" when we see the umbrella language.
- "Abusive acts are unlawful" and gives some examples. Count it.
- Says nothing about abusive acts, lists things, but says the list is not exhaustive. Count it.
- They enumerate a few things, but doesn't say that other things are unlawful. Don't count it.
Three models: (0) there is no prohibition against any abusive acts; (1) prohibition against abusive acts with a list of examples which aren't exhaustive; (2) list of prohibited acts w/ comment that the list is not exhaustive; (3) give you a list but they don't say anything else (that would suggest the statute only prohibits those things).
Make predatory pricing its own cell
Open up a new cell We can give the US a zero based on the Mashuta decision and explain in the comments that the defenses are now so strong, that the prohibition is close to non-existant. US gets a 1 up to 1993 and a zero starting in 1994
If there's a prohibition on the books with no qualifications, but they don't enforcement, then we will code that. But if there is a prohibition, but it's so heavily qualified that the gov't will never actually catch anyone, then we don't code that.
E.g. output quotas
Hylton: This is pretty-much it. Also, a group agrees not to sell to a certain market "We aren't going to sell to the West side." Concerted agreements not to enter certain market territories counts, too.
Include comment showing how it's different from output restraint Include the word "(boycott)"
Hylton: Basically this covers things. Also have to include the case where a rival needs your product to make a new product.
Hylton: Language has to be CLEAR that activities outside the nation that affect the nation's economy are covered.
Dominance - Obstacles to entry
Both dominance and RTP should combine the obstacles to entry and eliminating competitors field into a new field "Obstacles to entry / eliminating competitors."
Make sure we say that the price is being set too high, to distinguish it from predatory pricing.
This also include different contractual obligations between similarly-situated buying firms. "different prices or different contractual obligations"
Resale Price Maintenance
The Act does not allow single firms to set the price at which its customers will ultimately sell their product to consumers.
Add "(retailers)" after consumers.
Change customers to retailers / add it in parens
Dominance - efficiency
This includes what is considered a "public good" defense under merger assessment.
RTP - market division
"I take West, you take East."
This does not include this kind of language, "We'll stay in the same market, but just not compete with each other."
Include comment about "I'll take east, you take west" (division) and "we'll both work here, but agree not to compete aggressively" (sharing). Also, w/ division say that the division must be exhaustive, no new customers may enter the market and be competed over
RTP - Market Sharing
An agreement between firms not to compete with each other in a certain market.
RTP - eliminating competitors
Old language prohibits everything.
New definition must look for specific text that actually says "eliminating competitors," or putting people out of business, etc.