Ok, day 2 as a guest blogger.  I'm off in a few minutes to teach the first day of Business Associations and Mergers & Acquisitions, so I'll be (mercifully) brief.

On Sunday David Zaring commented on the value of taking Antitrust while in law school.  I agree wholeheartedly that it's a terrific course, but especially so for a particular subset of students.

As I am sure is the case at many law schools, each year I encounter a number of students who entered law school with visions of social justice in their heads - and no real life experience to speak of - but who then discover that their real interest lies in business law.  Either they were ignorant of the joys and challenges of dealmaking, or they just assumed that they wanted to litigate.  The pedagogical challenge they present is not only to teach them the legal skills they need to practice business law, but also to help them get a feel for how businesses (and businesspeople) think and behave.

One way to handle this is through course selection.  In my experience, antitrust and business bankruptcy are the two courses that best expose what goes on behind the curtain in a large corporation.  Maybe it's the glimpse that antitrust provides into the proverbial smoke-filled room, or the fact that bankruptcy is when all is laid bare, but I urge all of my inexperienced business law students to take both courses. 

In addition, I should note, I of course encourage them to get involved with various externship opportunities as well as our small business clinic, both of which also provide insights into how businesses behave.  Finally, I give them a list of books by people like Roger Lowenstein and James Stewart that I encourage them to read offline.  "Deals from Hell" by Robert Bruner is also a good read for students who are unfamiliar with the doings of large businesses, as are a number of other fairly obvious choices.  Books of this ilk are also helpful in providing some recent background as to how (and why) the American economy has evolved in recent years, something that is especially important for students who paid no attention to economic news until law school (and maybe not even then).  More and more, for example, I am finding students who are unfamiliar with important corporate law developments like the Disney/Michael Eisner soap opera or even the doings of Enron (let alone events of the 20th century!).  How can they understand current trends in corporate law if they don't know the context in which the law developed?

By the way - I too saw the new Star Wars movie over the weekend.  As my six-year-old daughter recently explained to me, "star wars isn't just a phase, Dad, it's part of who I am."

Permalink | Antitrust | Comments (2) | TrackBack (0) | Bookmark

Josh Wright considers the question here.  He says the subject can be about exciting smoke-filled rooms.  Maybe those rooms are the document receptacles in the decade-long litigation that will never be going to trial that you've found yourself trapped in for the remainder of your time at the firm.  Nonetheless, if you read this blog, I agree with Josh: yes, you should probably take antitrust.

Permalink | Antitrust | Comments (2) | TrackBack (0) | Bookmark

Danny Sokol asks what determines whether a city's law firms have a critical mass of antitrust practitioners.  I've been thinking about this in connection with my work on regulatory engineering.  I have to say I'm stumped as to why any markets outside of the largest US legal markets (NY, Chi, LA, SF, DC) would have critical mass.  Perhaps it's driven by certain clients/industries?  Post your comments on Danny's blog.

Permalink | Antitrust | Comments (0) | TrackBack (0) | Bookmark

Who would have guessed?

Permalink | Antitrust | Comments (0) | TrackBack (0) | Bookmark

In a decision that suggests that Europe and America haven't yet managed to apply the same antitrust standards to companies that do business in both jurisdictions, the European Court of First Instance (just below the ECJ) has just ruled that Microsoft anticompetitively used its market dominance to freeze out competitor digital media players and invalidly refused to provide potential competitors with interoperability information.  It upheld the $689.4 million fine imposed on Microsoft in 2004 by the European Commission.  Here are a couple of news stories, here is the CFI press release; Danny Sokol has found the judgment, and with that, I will turn over commentary to the antitrust mavens at Truth on the Market and the Antitrust and Competition Policy Blog.

Permalink | Antitrust | Comments (0) | TrackBack (0) | Bookmark

As a stockholder in Whole Foods -- and wannabe customer -- I am admittedly biased, but the FTC's decision to oppose the merger of Whole Foods and Wild Oats makes no sense to me. The FTC claims that Whole Foods and Wild Oats are both "premium natural and organic supermarkets." Whole Foods' CEO John Mackey responded to the FTC's complaint with a massive blogpost on the Whole Foods website. (How to win friends and influence regulators?) His main point is that Whole Foods competes with all supermarkets, not just with other "premium natural and organic supermarkets." With regard to that smaller market definition, Mackey observes:

Is there actually a separate category of "premium natural and organic supermarkets"? Let me state quite clearly up front that there absolutely is! However, that category actually consists of only one company-Whole Foods Market. We created the category and to-date we are the only company that actually belongs in it. Wild Oats, Earth Fare, and a few other companies have tried copying us in the past, but with very little historical success to actually show for it.

Ok, I am not sure that was very helpful to his cause, but you get the drift. In the end, the FTC's case seems to rest heavily on statements by Mackey about the purpose of the merger. In an email to his board of directors, Mackey listed as the top two reasons for the acquisition: "Elimination of an acquisition opportunity for a conventional supermarket" and "Elimination of a rival." So one big question in all of this is: how important is Whole Foods' intention?

In a white paper on the proposed merger, the American Antitrust Institute reasons:

An analysis of the merging parties' pricing data in relevant markets should be viewed as complementary to the parties' statements that the purpose of their merger is to avoid competition. Whole Foods' John Mackey has made a number of public statements regarding the motives for the merger. Some of these statements reflect legitimate objectives such as cost savings, but others reflect a clear desire to stifle competition. In light of this, "natural experiments" using price data to determine if existing or potential competition discipline pricing by the merging parties should be viewed as a complement to anticompetitive motives in developing evidence that the merger would tend substantially to lessen competition.

Over at TOTM, Geoff Manne bristles at the notion that pricing data is "complementary" to intent analysis:

If it is impossible to determine ex ante whether anticompetitive intent is just bluster, doesn't it rather more confuse than "focus" the likely effects of a merger?  I get the presumption that "what one intends to happen, that is what is likely to happen." I just don't get why that presumption is ever actually warranted in a situation as complex as anticipating the likely effects of a merger.

Well stated.

For another interesting exchange about the relevance of Wild Oats' inability to obtain adequate financing, see the W$J letters from Arnie Celnicker (former FTC attorney) and Don Boudreaux (GMU economist). Good stuff.

Permalink | Antitrust | Comments (4) | TrackBack (1) | Bookmark

Senator Herb Kohl (D-WI), new chairman of the Judiciary Committee’s Antitrust Subcommittee, obviously is livid about the possible acquisition of Midwest Airlines, based in Milwaukee, and AirTran, based in Orlando. Thom Lambert reprints Senator Kohl's rant it all its glory. There's just one teensy weensy problem: this deal has nothing to do with antitrust. Cue Thom:

Sen. Kohl's comments sound like the sort of thing I hear from my non-lawyer friends when I tell them I teach antitrust law. The remarks demonstrate almost no understanding of antitrust’s role and purpose and instead treat antitrust as a just another tool for protectionism.

Sen. Kohl never says a word about the only real point of competition between Midwest and AirTran — i.e., the routes served by both airlines. That's probably because the airlines compete on so few routes. Comparing the Midwest route map (click on "Midwest Airlines Route Map") with the AirTran route map (run your cursor over the cities to see the routes from each) reveals minimal competition between these two airlines. Almost all Midwest flights originate or terminate in Milwaukee or Kansas City. AirTran, which has dozens of routes from Atlanta and Orlando, appears to offer only six flights from Milwaukee and four from Kansas City. Midwest flies one Atlanta route and two Orlando routes. Because the two airlines serve different areas (and the areas where there’s significant overlap are subject to intense competition from other airlines), a combined AirTran/Midwest would not have the power to reduce output and raise price above competitive levels. That is all antitrust cares about.

Well done.

UPDATE: Speaking of antitrust, Peter Lattman offers some nice background on the potential deal between Alcoa and Alcan.

Permalink | Antitrust | Comments (1) | TrackBack (0) | Bookmark