I was pleased, along with Josh Wright and several other antitrust scholars, to submit an amicus brief in support of cert. in the Tobacco Master Settlement Case. We argue that the state action exception to the antitrust laws should not be extended to cover a multistate government-created cartel such as this one. We also survey the appalling antitrust economics of the pact–according to one recent study, although the MSA agreement resulted in a tax increase of about 44 cents per pack of cigarettes, cigarette prices rose over a dollar per pack. It also carves up the market and essentially provides fixed market shares for the incumbent big tobacco companies, who working together with plaintiff’s lawyers and state AG’s have created and enforced a nationwide cartel.
Another amicus brief was filed in the case by Alan Morrison, Richard Epstein, and Kathleen Sullivan, challenging the multistate agreement under the Compact Clause of the Constitution. An article in Forbes calls this pairing of Morrison and Epstein an “Odd Couple” pairing. I hope that the Supreme Court will recognize that if lawyers as diverse as Morrison, Epstein, and Sullivan recognize how much the MSA stinks, it will take cert and review the case.
Delving deeply into this case in connection with writing this amicus brief I was really just stunned at how grotesque the MSA is. I really do hope that the Supreme Court takes cert. to take a look at this thing and eventually overturns it. The Court has never before extended the state action doctrine to allow government to work together with private industry to create an interstate cartel. We argue in the brief that even if a state can be permitted to enact anticompetitive laws under Parker v. Brown, the logic of that case itself rests on a logic of competitive federalism and that, in turn, necessitates that the anticompetitive law’s effects end at the state line.