Major Per Se Violations In Antitrust
1. Price fixing
2. Division of markets
3. Group boycotts
4. Tying arrangements
Tying: conditions the sale of one commodity (tying good)
on the sale of another (tied good)
Examples:
*
full line forcing
* lease of a machine with supplies used by the machine
Tying good – the one with market power that everyone wants
Tied good- people don’t want it but will buy it because they need the
tying good
Usefulness:
1 evasion of price regulation (illegal under price regulations)
2 Protection of goodwill (jerrold)
3 Economies of production
4 Price discrimination (illegal by Clayton 3)
5 Economic Leverage (illegal by Clayton 2) & Northern Pacific
which tied leasing of land to use of railroad services.
EXCLUSIVE DEALING
Definition: Requiring a purchaser or seller to do business with
only one company.
Examples: Franchising arrangements
What must be legally proved in a tying case
by the prosecution:
1. Economic power in the market for the tying goods (or
undesirability of the tied good), plus
2. Substantial commerce in the tied goods, plus
3. Less restrictive intervention to achieve efficiencies
Allegedly gained by tying, equals
4. A per se violation of the antitrust laws
Prevention of Tying or Exclusive Dealing:
Clayton paragraph 3:
“It shall be unlawful for any person… to lease or make a sale…
On the condition… that the purchaser thereof shall not use or
Deal in the goods…of a competitor…where the effect of such…
Condition…may be to substantially lessen competition or tend
to create a monopoly in any line of commerce.”
PRICE DISCRIMINATION
Definition: a price difference resulting from sales by an individual
Seller of the same kind of goods at a lower price to one purchaser
Than to another.
Prohibited by Section 2(a) of Clayton Act:
“That it shall be unlawful for any person engaged in commerce…
to discriminate in price between different purchasers of commodities
Of like grade and quality… where the effect of such discrimination
May be substantially to lessen competition or tend to create a
monopoly in any line of commerce…”
To convict of price discrimination Prosecution had to prove a
differential in price between two customers.
Economic rationale:
•
Anticompetitive effects on customers due to price
discrimination
•
Competitors, not competition, may be favored by
prevention of price discrimination (Utah Pie)
•
Legal and economic definitions of discrimination differ
(legal definition makes no economic sense: suppose there
are two goods of different quality that have the same price;
there may be no legal discrimination but there is economic
discrimination)
Defendant could always argue:
•“cost justification”
•Clayton 2a: “…That nothing herein contained shall prevent
differentials which make only due allowance for differences in
the cost of manufacture, sale or delivery resulting from the
differing methods or quantities in which such commodities are
to such purchasers sold or delivered…”
•“good faith meeting of competition”
Clayton 2b: “…Nothing…shal prevent a seller rebutting the
prima facie case thus made by showing that his lower
price…was made in good faith to meet an equally low price of
a competitors