252.1 sec. 1 - International Antitrust Law and Policy (Spring 2009)[home]

U.C. Berkeley, Boalt Hall School of Law, Spring 2009
Here is a link to the course page.

Hanno F. Kaiser

Class 1: Competition law in the context of economic globalization: Recurring Themes and a Roadmap (January 16, 2009)

Topics for discussion

  • "All politics is local, and all trade is global." Is that right? Just how global are markets? And just how local is the law?
  • Who should regulate conduct with transnational effects? The state in which the conduct takes place or where the protagonists are located? Or all nations in which the effect of the conduct is felt? (GE/Honeywell)
  • As a result of the "effects doctrine," multiple nations have jurisdiction over conduct with transnational effects. How should the unavoidable conflicts be resolved? Deference, bilateral agreements, multilateral agreements, WTO? Can conflicts be avoided through convergence?
  • Antitrust doctrine developed under the assumption of a "closed economy" where all producers and consumers affected by anticompetitive conduct are domestic and have some measure of influence over their government. An "open economy" changes these assumptions. Should national or global welfare be maximized?
  • Why have a market economy in the first place? And if one chooses a market economy, what other choices follow (private property in non-rivalrous goods, freedom of contract, competition)
  • The role of competition law: limited intervention or active "marketplace design"?
  • Efficiency effects of competitive markets: Allocative efficiency, productive efficiency, dynamic efficiency
  • Non-efficiency effects of competitive markets: Market integration, employment, provide the tax base for to promote social justice and protect the environment, protecting the democratic process from concentrated economic power, preserving conditions of relative bargaining equality under which contracts can reasonably be trusted to produce fair results
Required reading Optional reading
Fox, World Competition Law: Conflicts, Convergence, Cooperation (2007) (Excellent introduction to the themes of our course.) (on bspace)
Kroes, Foreword, Report on Competition Policy (2006)
Handout, Goals of Competition, Class 1
Slides: World GDP over time
US antitrust laws (excerpts)
Elhauge/Geradin, Global Antitrust ("E&G"), Preface (pp. iii-iv)
Barnett, U.S. DOJ, Global Antitrust Enforcement (2007) (Statement of the DOJ's policy position)
Lowe, Europe, DG Competition, International Cooperation (2006) (Statement of DG COMP's policy position)
"A Global Economy?" in Held & McGrew, Globalization / Anti-Globalization (2002) (excerpt) (Basic facts about economic globalization.) (on bspace)
Friedman, Free to Choose (excerpt) (A clear, influential statement of free market libertarianism) (on bspace)

Classes 2, 3: Horizontal Agreements under U.S. and EU competition law (January 23/30, 2009)

Topics for discussion

  • Horizontal agreements: price fixing and market sharing compared to joint ventures
  • The statutory basis: Sherman Act, Clayton Act, FTC Act and Art. 81/82 of the Treaty
  • The institutional basis: DOJ, FTC, States, private plaintiffs; European Commission, etc.
  • Substance: horizontal "agreements in restraint of trade"
    • Standards of review: per se illegality and rule of reason
  • Cartels have been described both as the "supreme evil" and as "children of despair." Why are cartels so bad? Are they, in fact, always bad? After the Great Depression, cartels were seen as necessary to stabilize the economy. Should there be "crisis cartel" exemptions?
  • A first look at export cartels and how national welfare trumps global welfare considerations
Required reading Optional reading
Kaiser, A Primer in Antitrust Law and Policy (2009) pp.1-10, 18-21, 23-24, 29.
E&G, Chapter 2 (pp. 60-71) (Overview of Section 1 and Art. 81)
U.S. v. Socony Vacuum Oil, 310 U.S. 150 (1940) (price fixing, great post-depression case, very apropos) (excerpt from Gavil, Kovacic, Baker, Antitrut Law in Perspective, 2d. Ed (2008) ("GKB") on bspace)
Commission Decision of 23 April 1986 No 86/398/EEC, Polypropylene, O.J. 1986, L 230/1 in E/G, pp. 97-100; also Commission press release 07/271994.
Palmer v. BRG of Georgia, 498 U.S. 46 (1990) in E&G, pp. 125-28 (market division)
Commission Decision 91/227 of 19 December 1990, Soda-Ash-Solvay, ICI, O.J. 1991, L 152/1 in E&G, pp. 132-37
E&G, Global Antitrust, Chapter 1, The Remedial Structure (pp. 4-59) (Outline of key institutional and procedural elements of U.S. and EU competition law.)
Commission Decision, Case IV/34.456 O.J. L 131/15, May 26, 1994, Stichting Baksteen (Crisis cartels?) (excerpt from GKB on bspace)
BMI v. CBS, 441 U.S. 1 (1979) in E&G, pp. 74-84 (modern, rational approach to joint ventures)
Commission Decision 85/77/EEC of 10 December 1984, Uniform Eurocheques, O.J. 1985, L 35/43, in E&G, 101-105

Class 4: Guest Lecture: The Honorable J. Thomas Rosch, Commissioner of the Federal Trade Commission, On Behavioral Economics, February 6, 2009


Required reading Optional reading
Rosch, Concurring statement in FTC v. Ovation Pharmaceuticals (2008)
Stucke, New Antitrust Realism (2009)
Wright, No Ovation for FTC's Latest Enforcement Theory (2009)
Anderson, The End of Theory (2009)
Stucke, Behavioral Economists at the Gate (2008)
Tor, A Behavioral Approach to Antitrust Law and Economics (2004)

Class 5: The fight against international cartels and the global success of leniency programs, February 13, 2009

Topics for discussion

  • A close look at two of the most notorious international cartels: Lysine and Vitamins.
  • On keeping your "friends" in and everyone else out: scorecards, audits, compensation schemes.
  • The reality of international cartel investigations (complete with grainy DOJ/FBI video footage)
  • A special problem: Cartels aimed at exploiting developing nations
  • The Prisoners' Dilemma in action. Leniency programs.
Required reading Optional reading
U.S. v. Andreas, 216 F.3d 645 (7th Cir. 2000) (excerpts on bspace).
James Griffin, Caught in the Act: Inside an International Cartel (2005) (We will watch and discuss the FBI videotapes of the Lysine cartel. This speech provides a roadmap)
Kaiser, Mergers, Slides 65-66
DOJ Corporate Leniency Program
DOJ up-to-date List of Major Antitrust Fines
Lysine cartel
Connor, Global Cartels Redux: The Amino Acid Lysine Antitrust Litigation (1996)
Kurt Eichenwald, The Informer (2001) (The story of the people behind the Lysine cartel.)
James Lieber, Rats in the Grain (2000) (More focused on the legal aspects of the Lysine cartels than The Informer. Despite the weird title, a solid work of journalism.)
Vitamins, Inc.
Case COMP/E-1/37.512 - Vitamins. (Read ΒΆΒΆ 1-21, 76-97, 160-226, 551, 568-69, 588-89, 652, 655, 659, 712, 718, 738-42, 755.)
Connor, Extraterritoriality of the Sherman Act and Deterrence of Private International Cartels, AAI Working Paper (2005) (Background on the Vitamins cartel and its economic impact)
Connor, The Great Global Vitamins Cartels (2008) (An exhaustive treatment of the Vitamins cartel.)
General information about cartels
Scott Hammond, Recent Developments, Trends, and Milestones In The Antitrust Division's Criminal Enforcement Program (2008)
Levenstein & Suslow, Contemporary International Cartels and Developing Countries: Economic Effects and Implications for Competition Policy, 73 Antitrust L.J., 801 (2004)(on bspace)
DOJ FAQ on the Leniency Program (2008)
DOJ Individual Leniency Program
OECD Recommendation against Hard Core Cartels (1998)

Classes 6, 7: Jurisdiction, extraterritoriality, sovereignty, February 20/27, 2009

Topics for discussion

  • The public and private international law dimension of extraterritoriality: Prescriptive jurisdiction and conflict of laws
  • The rise of the regulatory state and the need to regulate foreign conduct with domestic effects
  • Sharpening our analytical toolkit: Conduct, Effect, and the two core constituencies of national competition laws: consumers and producers
  • Should foreign private plaintiffs be allowed to sue foreign defendants for harm suffered abroad in U.S. courts?
Required reading Optional reading
(1) Class 6: U.S.
E&G, Chapter 8, Markets that Span Multiple Antitrust Regimes, Intro, pp.1100-09
American Banana Company v. United Fruit Company, 213 U.S. 347 (1909) (excerpt on bspace)
U.S. v. Alcoa, 148 F.2d 416, 443 (2d Cir. 1945) (excerpt on bspace)
Hartford Fire Insur. v. California, 509 U.S. 764 (1993) in E&G, 1109-17
(2) Class 7: EU
Dyestuffs, ECR 1972 [619] (ECJ), in E&G, 1137-50
WoodPulp, 27 September 1988, ECR, [1988] 5193 (ECJ)
Gencor v. Commission, T-102/96 ECR, [1999] II-753 (CFI)
F. Hoffmann-LaRoche Ltd. v. Empagran S.A., 542 U.S. 155 (2004), in E&G, 1124-34
Fox, Testimony before Antitrust Modernization Commission(2006)
Swan & Murphy, Cases and Materials on the Regulation of International Business and Economic Relations, 515-24 (1991) (excerpt on bspace)
Anthony D'Amato, Is International Law Really "Law?", International Law: Process and Prospect 1-27 (1987) (on bspace)
Anne-Marie Slaughter & David T. Zaring, (1988)
Kaiser, Blog Posts on Empagran, Antitrust Review (view posts tagged with "extraterritorial")

Class 8: Pricing offenses by dominant firms: Predatory pricing, excessive pricing, and price squeezes, March 6, 2009

Topics for discussion

  • The U.S. and the EU approach to unilateral conduct is very different. For the U.S., dominant firms are the winners in a competitive struggle and are entitled to the spoils of monopoly. In the EU, dominant firms are viewed with greater unease for their ability to "opt out" of having to pursue their self-interest through the competitive market, which aligns the private profit motive with consumer welfare.
  • Should powerful firms have "special obligations" to protect the competitive process? (Peter Parker principle: "With great powers come great responsibilities.").
  • If we impose special obligations on a dominant firm, are we not punishing the winners? How is this different from progressive taxation? (Is it?)
  • Should courts really second guess unilateral pricing decisions by dominant firms?
  • What - if anything - does the "recoupment" requirement in Brooke Group add?
  • What role should "intent to drive a competitor from the field" have in predatory pricing cases? Isn't that what every firm wants?
Required reading Optional reading
E&G, Global Antitrust, Chapter 3, A, B(1) and B(2) (pp. 248-276) (basic structure of monopolization and abuse of domiance)
E&G, 327-43 (the conduct element in a monopolization/abuse of dominance claim)
Below-cost predatory pricing
Brooke Group v. Brown & Williamson, 509 U.S. 209 (1993), in: E&G, 343-56
C-62/86, Akzo Chemie BV v. Commission, [1991] E.C.R. I-3359; and
Case C-333/94P, Tetra Pak International SA v. Commission, [1996] E.C.R. I-5951 (Tetra Pak II), in E&G, 358-60
Above cost predatory pricing
Joined Cases T-24/93, T-25/93, T26/93 & T-28/93, Compagnie Maritime Belge Transps. SA v. Commission, 1996 E.C.R. II (CFI); and
Joined Cases C-395/96 P&C-396/96 P, Compagnie Maritime Belge Transps. SA v. Commission 2000 E.C.R. I-1365 (E.C.J.).
Case T-228/97, Irish Sugar PLC v. Commission, 1999 E.C.R. II-2969 (CFI), in: E&G 376-84
Price squeeze
Pacific Bell v. LinkLine , U.S. Supreme Court Slip Opinion, Decided February 25, 2009
E&G, pp.468-74, which includes excerpts from: (a) Case No IV/30.178 Napier Brown-British Sugar, O.J. L.284/41 (1988); and (b) Case T-5/97, Industries Des Poudres Spheriques SA v. Commission, [2000] E.C.R. II-3755 (CFI); E&G, pp. 470-74
Excessive pricing
Verizon v. Trinko, 540 U.S. 398 (2004); and
Case 27/76, United Brands Co. v. Commission, [1978] E.C.R. 207, in: E&G, 393-401.
Fox, What is Harm to Competition?, 70 Antitrust L.J. 371 (2002) (Is exclusion an independent offense or derivative of exploitation? Read only I, II, and IV.)
DOJ Single-Firm Conduct Report (2008)
EC Art. 82 Guidance (2009)
Statement of FTC Commissioners Leibowitz, Harbor, and Rosch to the DOJ Single-Firm Conduct Report (2008)
Kaiser, Blog post on LinkLine (2009)

Classes 9, 10, 11: Unilateral duties to deal, IP and innovation: A special focus on the EU Microsoft Decision, March 20/31, April 3, 2009

Topics for discussion

  • Under what circumstances does a dominant firm have a "duty to deal" with a competitor? Do different standards apply to:
    • Duties not to stop dealing (i.e., abusive termination)
    • Duties to start supplying (i.e., de novo supply)
    • Duties to start supplying intellectual property
  • "If successful firms have to share their property with competitors, we destroy their incentives to innovate." What (if anything) is wrong with this statement? Think about the similar line of argument in the IP context: "Unless we increase IP protection, artists will have no incentives to create music anymore." Consider how the diamond/water paradox might help us in framing the issue.
  • Should essential infrastructure be governed only by exclusive property rights or should there also be a public commons overlay once a dominant firm controls essential infrastructure?
  • Should we encourage radical innovation at the expense of incremental innovation?
  • Should consumer welfare be the guiding principle for justifying duties to deal? Or is the "open market" principle, which focuses primarily on a competitors freedom to compete, the more appropriate normative foundation?
Required reading Optional reading
(1) Class 9 and 10: Duties to deal in the EU

(2) Class 10 and 11: Duties to deal in the U.S.

  • DOJ Single-Firm Conduct Report (2008), focus on pp. 119-129
  • Essential facilities (or not?)
    • Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), in E&G, 411-18
    • Verizon v. Trinko, 540 U.S. 398 (2004), in E&G, 424-29
  • Who owns aftermarkets?
    • Image Technical Services v. Eastman Kodak, 125 F.3d 1195 (9th. Cir. 1997) ("Kodak II") (I will post excerpts on bspace)
    • Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d. 1147 (1st Cir. 1994) (I will post excerpts on bspace)
    • CSU v. Xerox Corp., 203 F.3d 1322 (Fed. Cir. 2000) (I will post excerpts on bspace)
  • Kaiser, Antitrust and Innovation, Slides 69-86
  • Kaiser, Summary of the U.S. Microsoft Case (Graphical overview of the various claims in the Microsoft case)

Classes 12, 13: International mergers & acquisitions, April 10/17, 2009

Topics for discussion

  • The great international oligopolies, has the world become more or less competitive since 1945?
  • Are large multi-national firms as competitive as smaller firms?
  • Should there be a maximum absolute size for firms?
  • Should there be a common substantive merger standard for the world? A common procedure?
  • Do we (still) need industrial policy that includes values other than efficiency?
Required reading Optional reading

Class 14: Putting it all together: The Rise of the Multinational Corporation and Institutions of International Antitrust Enforcement, April 24, 2009

Topics for discussion

  • The US (DOJ, FTC, and the States) and the EU enforcement systems (DG COMP and the Member States)
  • The third stop on the Grand Tour: China's new Anti-Monopoly Law; a study in distributed enforcement
  • Institutional choices: WTO, OECD, ICN
  • Bilateral and multilateral cooperation agreements
  • Does harmonization work where it increases the power, prestige, and budget of national competition agencies and fail where it doesn't? Is such a public choice analysis of agency behavior appropriate?
Required reading Optional reading
  • Makan Delrahim, Coordination and Cooperation (2004) (The nuts and bolts of DOJ coordination with other regulators)
  • EC Treaty 5, 10, 28-30, 31, 81-89
  • Regulation 1/2003
  • DG COMP Homepage
  • DG COMP Orgchart
  • Export cartel exemptions
    • DOJ & FTC International Operations Guidelines, excerpt in E&G, 1151-56
    • Javico v. Yves Saint Laurent, C-306/96, ECR [1998] I-1983 (ECJ), in E&G 1156-59