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In what has become an annual affair, around this time of the year, I like to make the case for law students to take antitrust. Each year, the post is edited and tweaked a little bit.  So, without further ado, here is this year’s edition of “Why Take Antitrust?”

As the start of the new academic year inches closer, and students are deciding what courses to take, I thought I’d give a little plug to antitrust law. I’ve seen enrollment in antitrust courses vary dramatically over the past 10 years or so since I was a student and now as a professor. I certainly know the three-pronged case against taking antitrust: “its not a bar course,” “you have to know a bunch of economics, right?”, and “its really difficult.”  But I hear this question from students frequently and I thought I’d share my typical answer to the titular question here:

First, antitrust is flat out interesting stuff.  We’re talking cartel arrangements in rooms filled with smoke, complex price-fixing arrangements,  rent-seeking and use of government restrictions to exclude rivals, and all forms of cutthroat competition between firms to stay alive in a competitive marketplace.  You know, movie material.  For some reason antitrust has earned the reputation of being a “boring” class for specialists who are interested in economics.  Wrong, wrong, wrong.  Sure, antitrust will force you to learn some economics because the law itself has incorporated economic concepts (see, e.g. the Merger Guidelines).  But this is a feature, not a bug.  Economics is a tool that can help one understand how the world works and provide some interesting insight on business practices that we observe in the world and impact us everyday at the gas pump, the grocery store, the computers we all work on, and just about everywhere else.  Supply and demand graphs might be boring to some, and I don’t mean to suggest that antitrust is for everyone all the time, but its fun to think about questions like how the Sirius-XM merger will impact prices, whether premium, natural and organic supermarkets are a relevant market (the issue in Whole Foods/ Wild Oats), and the economic and business organization of the National Football League, and just about every business venture involving Google, Microsoft, Apple and Yahoo.

Second, antitrust law is become an increasingly important component of the international business landscape.  Take a look at this photo (the countries in red have antitrust laws on the books). Over 100 countries currently have passed antitrust laws (see here). Having at least a passing knowledge of antitrust is increasingly an important asset for corporate lawyers generally.  With antitrust enforcement now in India, China, Hong Kong, Singapore, and the EU-US antitrust convergence/divergence debate growing in importance, challenging legal and economic debates will continue to rage in the antitrust space for years to come (Between you and I, these changing market conditions have also increased demand for antitrust law professors and economists in recent years, not to mention — and most importantly, for antitrust lawyers).   After a slowdown for a few years with the economy, some casual empiricism suggests that merger activity is starting to pick up, antitrust and consumer protection litigation is increasing, and antitrust practices are going to need to reload.

Third, the bar exam issue.  While its true that antitrust law is not going to help you on the bar, neither are a bunch of interesting courses. And one shouldn’t conflate inclusion on the bar exam with general importance in terms or, of course, intellectual interest (which so far as I can tell, is still an acceptable reason for enrolling in courses).  Besides, there is at least some evidence that courseload choices have little to do with bar passage rates.  On top of all that, in light of #2, it is a good time to pursue a career as an antitrust lawyer.

If you are a law student — and haven’t thought about adding antitrust to your dossier — give it some thought.

Are We Reinvigorated Yet?

Josh Wright —  4 December 2008

Despite rumors, slogans, and “new” conventional wisdom to the contrary (See, e.g. here, here and the Obama campaign promise to “reinvigorate merger enforcement), it is apparently not the case that the current DOJ is not interested in enforcing the antitrust laws. Perhaps it never was. This interesting interview (HT: Danny Sokol) suggests that the DOJ pressured Google and Yahoo to abandon their deal with a threat to file in federal court to enjoin the transaction. Sandy Litvack (Hogan & Hartson), whom the DOJ hired to prepare to litigate the case if necessary reveals that “We told them we were going to file the complaint at that time of day. Three hours before, they told us they were abandoning the agreement.” Of course, critics of the Bush Administrations’ antitrust policies can say that this is but one instance of aggressive antitrust enforcement — albeit a big one — which should be judged alongside refusals to pursue cases against the Whirlpool/Maytag and Sirius/XM mergers. But we’re dealing with small numbers and anecdotes here which are a woefully insufficient basis from which to reject the alternative — but less newsworthy — hypothesis that the DOJ pursues cases that they believe violate the antitrust laws and harm consumers but does not otherwise.

By the way, do you think the fact that the Google-Yahoo “almost” complaint included a Section 2 claim mean antitrust commentators and critics will count this a monopolization case?

The Boss Settles It

Josh Wright —  5 February 2009

Is the Ticketmaster/Live Nation merger anticompetitive?  Does it present an opportunity to test whether the DOJ will adopt the evasion of constraint theory of monopolization which I’ve criticized?  These are academic questions.  The matter has been settled by the Boss:

A final point for now: the one thing that would make the current ticket situation even worse for the fan than it is now would be Ticketmaster and Live Nation coming up with a single system, thereby returning us to a near monopoly situation in music ticketing. Several newspapers are reporting on this story right now. If you, like us, oppose that idea, you should make it known to your representatives.

Well that settles that.  I’ve always thought antitrust was missing star power (though, Jesse Jackson opined publicly on the Sirius-XM discussion — do readers have any other good examples of celebrity antitrust opinions?).   More details here.

It looks like Sirius-XM is now contemplating bankruptcy (HT: Danny Sokol). There were quite a few critics of the Bush administration’s decision not to challenge the merger. Various antitrust commentators and critics (as well as rivals like the NAB) lined up on the side of enforcement, arguing that the merger would lead to a monopoly in the satellite radio market and hammering the administration for its failure to challenge. The DOJ defended its decision in a press release with distributors (automakers) also coming to its defense.

One obvious testable implication of the theory that the deal would create a merger to monopoly (in whatever relevant antitrust market you’d like) is that the post-merger firm would earn monopoly profits.  Of course, one of the challenges of retrospectives is that conditions change in the post-merger world.  That’s obviously the case here.  However, that does not mean that one can’t analyze whether the rate of return earned by the post-merger firm is consistent with the anticompetitive theory.  I wonder if the critics of the DOJ decision not to challenge this merger would view a post-merger bankruptcy as inconsistent with their theory?

For those interested in some antitrust analysis of the merger, you might be interested in checking out the conference on Merger Analysis in High-Technology Markets that my colleague Thomas Hazlett and I put on at George Mason University on behalf of the Information Economy Project. While the entire conference was filled with some really nice papers, forthcoming in the Journal of Competition Law & Economics, the third panel features competing analyses of the Sirius-XM merger by Tom Hazlett (link to paper here) and J. Greg Sidak. You can access the papers at the same link or listen to the audio on iTunes here.

Related posts:

Dont Call It A Comeback

Josh Wright —  11 April 2009

When I came onto the job market in 2004, a number of advisers told me that I should not market myself as an “antitrust guy.”  The prevailing view on the job market was that “antitrust was dead.”  This perception was conveyed one way or another in interviews or conversations with folks in the legal academy.  The conventional wisdom was that nothing exciting had happened in the antitrust world since the Reagan era.  On top of that, the story goes, there were few important questions that remained to be answered and not only minor contributions left around the margins.  I ignored the advice at the time thanks to an uncle (and antitrust lawyer) who had turned me on to economics and antitrust in high school.  Truth be told I really didn’t want to study or write about anything else at the time and really wasn’t interested in saying otherwise. 

Five years later it is my impression that outside the antitrust community this conventional wisdom still prevails.  Antitrust, to many, is viewed as a “luxury” which I take to mean that a serious law school can get along quite fine without having a faculty member whose primary teaching and research interests is antitrust.  Antitrust, they say (I paraphrase and oversimplify but not by much), is in low demand in the legal academy because with the exception of a few big names cases from time it’s a field of little practical importance, there is not tremendous demand from students, and it’s a less intellectually interesting field than other areas of commercial law that have thus far had less exposure to economic and empirical thinking. 

To the extent that this is the conventional wisdom in the legal academy (and I’ve heard it often enough to suggest that its at least a widely held view), it is mistaken and has been for the last decade or so.  And that’s not just the case at George Mason where law and economics is a research and teaching priority and where antitrust has had fairly stable and relatively high demand.  For several reasons, contrary to the conventional wisdom I hear from the legal academy, it is an incredibly exciting time to practice, think about, and write about antitrust issues.  I obviously can’t make the comparisons from firsthand knowledge, but I suspect that right now is one of the most intellectually active antitrust eras in history.  I suspect that most antitrust practitioners and academics would agree with that proposition, perhaps with quibbles over whether it ranks at the top of the list or somewhere like second or third.  I don’t want to get bogged down in that debate here.  But when I explain to colleagues how exciting of a time it is in antitrust right now (and especially as an antitrust academic) the response is normally surprise more than anything else.   The interesting point though is not that antitrust has really been around and in a growth phase for the last decade or so.  Rather, the more interesting point to me is that the legal academy appears to finally be catching on to these changes.

While my sense is that most TOTM readers have some familiarity (or at least interest) in the field and a sense of the growth over the past decade, the frequent expression of surprise and interest from colleagues outside the antitrust community suggests that a post explaining these developments might be of general interest.  First, let me start with some evidence that the antitrust is no longer should be considered a law school luxury and that the legal academy is starting to catch on this new state of affairs.  Then I’ll talk a bit about some underlying causes.


Recent antitrust movements on the lateral market, and especially at highly ranked schools, are one type of evidence that the field is attracting attention.  In just the last year, consider the recent moves of Dan Crane to Michigan, Howard Shelanski to Georgetown, Christopher Leslie to Irvine, and Abe Wickelgren to Texas (and I might be missing others).  On top of those moves, there are several other schools in the top 20 and top 10 that either have current visitors, are considering various antitrust candidates for the future or have scheduled visits.   For this reason, my sense is that 2009 is not a one-time phenomenon for antitrust moves.  Another reason that this trend is likely to continue is demographics.  Many of the prominent antitrust scholars who were prominent figures in the antitrust battles of the 1970s and 80s are nearing retirement age or have already retired, leaving a number of schools in the top 15 or so that either have no significant antitrust presence or will not in the near future.

Another piece of evidence that the legal academy is learning that antitrust is back as a high demand area for scholars is the attention it is paid at conferences and in top journals.  Consider, for example, the reemergence of antitrust at ALEA where it will have a total of four panels this year — which is as many or more than all other fields.

The growth in intellectual activity in antitrust can also be observed in the expansion of journals dedicated to the area and the number of publications in prominent journals.  For example, in recent years new journals like Competition Policy International, Global Competition Policy, and the Journal of Competition Law and Economics (among others) have emerged and published a steady stream of high quality scholarship.  On top of that, my more casual empirical observation is that the number of antitrust articles in JLE, JLS, and top law reviews has increased in recent years.

Another observation is the emergence and activities of antitrust related centers and institutes at law schools across the country.  For example, we’ve noted the recent emergence of such centers at GW, and the competition related programs at the Searle Center at Northwestern.  These are in addition to similar centers at Berkeley, Loyola, across the Atlantic, as well as more familiar domestic and non-academic voices in the antitrust policy landscape like AAI.


So why has antitrust come back in this way over the past decade or so?  I think there are 4 primary causes. 

The first is the emergence of antitrust & intellectual property as a field.  Not only has the growth of this field and the intersection of patent and antitrust in particular created jobs for lawyers, but its raised to the forefront a number of new intellectual challenges for antitrust law in areas such as licensing, patent holdup, patent pools, reverse payments, and monopolization generally.

The second is the proliferation of antitrust internationally.  There are two components here that I think explain much of the growth in addition to the fact that we now have more than one hundred national antitrust laws — which creates all sorts of special challenges but would not itself, in my view, create the explosion in demand that we’ve seen in the legal academy.  The first is the emerging Chinese antitrust law and the high stakes battle between US and European regulators to influence the analytical underpinnings of applications of that law.  The second is the emergence of the European Commission as the most active and aggressive enforcer of single firm conduct in cases involving US firms like Intel, Qualcomm, Rambus and others.

The third cause is the unprecedented flurry of activity from the Supreme Court in recent years and the apparent willingness to address important antitrust issues.  For a number of reasons I suspect that this trend will continue and we’ll see the Supreme Court continue to take cases for the next few years.

A fourth factor is related to the others.  Over the last few years it has become difficult to read popular news sources without seeing an antitrust issue getting coverage.  The sheer number of high profile cases in recent years has a lot of attention. Consider recent cases that have got mainstream press: Whole Foods, all permutations of deals involving Google-Yahoo-Doubleclick, Ticketmaster-Live Nation, Sirius-XM, Whirlpool-Maytag, Intel, Microsoft, Rambus, and others. 

There are other factors  I think are at play here as well but probably have less influence despite contributing to the overall sense that antitrust is important again.  For example, political change has resulted in considerable debate over the Section 2 Report and also generated proposed legislation involving RPM and reverse payments that has raised the overall profile of antitrust.  Increasing concerns over consumer protection have given rise to a growth in antitrust related consumer protection actions. 

Overall, my sense is that these developments have created significant antitrust activity in practice, but more importantly for the changes in the legal academy, generated important new topics to think and write about.  For example, intellectual battles are now raging in antitrust scholarship over the appropriate scope of Section 5, antitrust analysis of single firm conduct (see, e.g., the AMC/Section 2 Report), the prospects of re-writing the Merger Guidelines, consumer protection and antitrust, empirical antitrust and evaluation of agency performance, patent holdup, resale price maintenance, reverse payments amongst other topics.   In turn, my sense is that the growth in practice has made antitrust a high demand subject for students (here’s a post on why to take antitrust).

After scoffing for months at the suggestion that satellite radio firms Sirius and XM should merge, Sirius CEO Mel Karmazin admitted this week that it’s something he’d like to see happen but expressed doubts about the antitrust authorities permitting the deal to go through. See stories here and here.

Karmazin is right that the proposed Sirius/XM merger presents some antitrust issues. But he may be wrong in thinking that the issues are insurmountable.

Take the issue of product market definition. Karmazin appears ready to concede that the relevant product market is satellite radio and that Sirius and XM are duopolists who by merging would become a monopoly. But why concede that? Satellite radio competes with regular radio for listeners. And many cars are now equipped with television and dvd players, which passengers (though not drivers) can watch. iPods can be hooked up to car speakers. And it is only a matter of time before Internet content (including audio streaming) will be widely available via portable wireless devices that are usable in cars. Satellite is just one medium among many through which it is possible to transmit content. And the market for audio content is quite thick, with Sirius and XM holding only a small combined share.

Even assuming that the agencies will define the product market narrowly to include only satellite does not end the inquiry. Neither XM nor Sirius nor a combined Sirius/XM can stop anyone else from supplying content via the satellite medium. There isn’t a discernible barrier to entry here. So if Sirius/XM raises prices unduly, one would have reason to expect entry into the satellite medium by other firms.

Another point to emphasize is the efficiencies associated with the merger, which would create an entirely new product for which there is clearly some demand. There are doubtless many Sirius subscribers who would like to hear some XM content and vice versa. Now the only way to do that is to buy two sets of hardware and subscribe to both. For these consumers at least, things would be better if they could buy all the content they want from a single provider. And in this sense at least, the merger would be unambiguously pro-consumer.

One final point: even short of a merger, it may still be possible for the two firms to facilitate “one stop shopping” for content by means of cross-licensing agreements permitting each firm to sell the other firm’s content to its own subscribers. But if this is permitted, then wouldn’t it be pointless to block a full blown merger?

Cramer on Sirius/XM

Keith Sharfman —  3 August 2006

A few weeks ago I suggested here that a merger between the two satellite radio firms, Sirius and XM, would not necessarily be as much of an antitrust problem as Sirius CEO Mel Karmazin seems to think.

Now market analyst Jim Cramer has weighed in on the issue and encouraged Karmazin to have Sirius do a hostile takeover of XM. While Cramer’s heart is in the right place, his suggestion that the merger would allow Sirius to “raise its prices, dictate its auto prices and get into retail with a vengeanceâ€? is not likely to help the deal succeed.

The extensive antitrust discussion that we had here a few weeks ago was all about why the deal would *not* enable Sirius/XM to raise its prices. As we pointed out then, these firms face extensive competition from other media, especially terrestrial radio, and therefore antitrust regulators need not be concerned about prices increasing in consequence of the merger. The benefits of the deal would rather be to reduce costs and improve product choices, particularly for consumers who would like one-stop access to proprietary content from both firms (e.g., someone who is a fan both of baseball, which XM carries, and football, which Sirius carries).

If Cramer is right that the deal would cause prices to increase, then there is more of an antitrust issue here than we thought.

Today’s report that Sirius and XM plan to merge vindicates the antitrust analysis offered here last June.

Regulators should analyze the merger from a broad “audio market” perspective that includes terrestrial radio. Considering the extensive non-satellite content available to listeners, and considering as well the efficiencies associated with the Sirius/XM combination, it is reasonable to conclude that consumers will benefit from the deal and that regulators should therefore allow it (after careful review, to be sure).

The question I’m left with is: how long will it take for GM/Ford to follow?

The proposed merger has been making lots of waves in the press as of late, including a Congressional hearing (Antitrust Review has links to all the hearing testimony) but not much serious grappling with the antitrust issues. I even read today that John Ashcroft has chimed in. Of course, it is very difficult to do much serious analysis about likely competitive effects without more information than is available publicly.

In any event, the WSJ has an informative exchange between Mark Cooper of the Consumer Federation of American and Donald Russell of Robbins Russell with the former arguing the merger will be anticompetitive and the latter challenging the standard arguments offered in favor of that proposition. It is a fairly entertaining read and a good summary of the antitrust arguments likely to be raised by the parties for those that are interested. My own take on this exchange: advantage Russell. Here’s an excerpt:

Antitrust lawyers often use a simple rule of thumb — if competitors oppose a merger, it’s usually good for consumers. And here, the AM and FM broadcasters, through their trade association, the National Association of Broadcasters, are opposing the merger very strongly. It’s hard to see any reason they would do so, other than the obvious reason: A concern that a merged company will take more listeners away from the broadcasters than XM and Sirius would be able to do as separate companies. In other words, that the merged company would offer a service that would be more attractive to consumers than the services they’re currently getting from XM and Sirius. So the first question I have for Mark and other merger opponents is this: If satellite radio doesn’t compete with AM and FM radio, why is the NAB fighting so hard to stop this merger?

My colleague Tom Hazlett made a similar point regarding the NAB efforts in a Miami Herald story (registration required) a few days ago:

If you’re an anti-trust enforcer and you see that all the competitors are banding together to oppose a merger in the name of “public interest,” it’s pretty easy to figure out that the truth is exactly the opposite.

This merger is an example I have discussed from time to time in my antitrust courses over the past couple of years, and one that may potentially raise some pretty interesting issues depending on the way the facts play out.  Should be fun to watch.

Jesse Jackson has come out against the Sirius / XM Merger …

ET Radio Merger Countdown

Paul Gift —  20 November 2007

The countdown is on for the XM-Sirius merger decision! (I wouldn’t be optimistic that the “end of the year” decision target will stand.)  Former FCC Chairman Reed Hundt and Representative Rich Boucher (D-Va) have recently come out in favor of the merger.  As everyone knows, it’s all about market definition, baby!  I’m not a gambling man, but I’d love to know what the Vegas odds would be for approval.

Paul asks about the Vegas odds on XM/ Sirius merger approval.  Its not quite Vegas, but Intrade is offering contracts on merger approval on or before December 2007, March 2008, and June 2008.  They’re trading at 5, 50, and 70 respectively.   So Paul, any of those contracts look good to you?