The Volokh Conspiracy

[Orin Kerr, June 28, 2007 at 3:16pm] Trackbacks

Picker on Leegin:

Over at the University of Chicago Faculty Blog, Randy Picker weighs in on this morning's antitrust decision.

bittern (mail):

Am I following the story correctly if I conclude that there is something of a consensus that the Sherman Act should continue to be considered other than at face value, and that the question is how quickly it should be further ignored when it seems most reasonable to do so?

The literal language of section 1 is quite powerful: "every contract ... in restraint of trade." . . . It was only in the Standard Oil decision (221 US 1 (1911)) that the Supreme Court abandoned the literalism of Trans-Missouri and moved towards evaluating the reasonableness of restrictions. [Randy Picker]

For which parts of the law do y'all consider a reasonableness standard cool? Just trying to pick up a free lay law education here. Thanks for anybody's clarification.

6.28.2007 5:58pm

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AntitrustReader:

If you contract to sell a widget to A next week, that's a restraint of your potential trade of the widget to B through Z tomorrow. Within a few years of the Act, the courts realized it could not be applied literally.

6.28.2007 6:46pm

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ATRGeek:

If you look at Standard Oil, basically the Court treats "in restraint of trade or commerce" as a term of art adopted from the common law, and then reads into it the common law standard for actions alleging undue restraints of trade, which is a reasonableness standard. When, if ever, the Court should be allowed to interpret statutes in that way is a matter of some controversy, but for what it is worth it was obvious to everyone that the statute would be absurd without some such implicit limitation.

6.28.2007 7:06pm

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PGofHSM (mail) (www):

However, the Sherman Act has to be read in the context of subsequent Congressional legislation regarding antitrust, and Kennedy's treatment of the Consumer Goods Pricing Act doesn't plausibly explain how Dr. Miles can be done without conflicting with the CGPA.

6.28.2007 9:04pm

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The Emperor (www):

I've never understood why RPM is looked at so skeptically. Presumably, companies could set up their own retail distribution network and sell the product at whatever price they choose. Why limit this ability in the case of selling through someone else's distribution network? Sure, if a company has market power their pricing should be looked at carefully. But that's a different issue.

6.28.2007 10:07pm

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ATRGeek:

The Emperor,

I think the most reasonable fear is that this is a way for competing retailers to fix prices, with the wholesaler basically just acting as their retailers' agent. And if they could do that with multiple wholesalers, they might be able to fix prices for all or most of the competing goods in a product market, or at least some closest substitutes.

6.29.2007 8:03am

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The Emperor (www):

ATRGeek,

Thanks. If there were competing retailers using RPM for all (or most) products in a particular market, I could see the problem. But if it's just one producer using RPM for one product, I don't see a reason to be concerned.

6.29.2007 8:38am

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jimbino (mail):

A retailer, like anyone else, should be forced to unbundle the services he offers, just as ATT was forced to do some decades ago. A doctor or dentist who handles insurance and medicare/medicaid filings and accepts credit cards should likewise be forced to unbundle his services, so that the uninsured person who pays cash should not have to subsidize the 40% overhead resulting from those non-medically related "services."

If the medical profession really had any "ethics" it would already observe this rule.

6.29.2007 1:31pm

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ATRGeek:

The Emperor,

I generally agree, although in certain markets it may take as few as two products. For example, if retailers could get both Coke and Pepsi to institute RPM, that would probably be enough to meaningfully fix prices in the cola market.

6.29.2007 3:31pm

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byomtov (mail):

I've never understood why RPM is looked at so skeptically. Presumably, companies could set up their own retail distribution network and sell the product at whatever price they choose.

It would clearly be illegal for two retailers to agree with each other to sell a product at a fixed price. RPM has the same result, through adifferent mechanism. If the manufacturer wants to set up its own stores, it can do so, but once it sells the item to a retailer it loses control over the retail price.

7.2.2007 3:04pm