Archives For commerce clause

AT&T Mobility LLC v. Concepcion, 2011 WL 1561956 (April 27, 2011) could end up being one of the most important pro-business cases of the last several years — even more important than Citizens United.

The case involved the application of Section 2 of the Federal Arbitration Act (9 U.S.C. §2), which makes agreements to arbitrate “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” Justice Scalia’s majority opinion held that this preempts California’s unconscionability rule applied in Discover Bank v. Sup.Ct., 36 Cal.4th 148, 30 Cal.Rptr.3d 76, 113 P.3d 1100 (2005) conditioning enforceability of arbitration on the availability of class arbitration.

The Court reasoned that

[t]he overarching purpose of the FAA, evident in the text of §§ 2, 3, and 4, is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings. Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.* * *

[T]he switch from bilateral to class arbitration sacrifices the principal advantage of arbitration—its informality—and makes the process slower, more costly, and more likely to generate procedural morass than final judgment. * * *

[C]lass arbitration greatly increases risks to defendants. Informal procedures do of course have a cost: The absence of multilayered review makes it more likely that errors will go uncorrected.

Arbitration is a matter of contract, and the FAA requires courts to honor parties’ expectations.* * *

Justice Thomas, concurring, relied on a textual argument that “the FAA requires that an agreement to arbitrate be enforced unless a party successfully challenges the formation of the arbitration agreement, such as by proving fraud or duress.”  The California rule is preempted under this approach because the Discover Bank rule “does not relate to defects in the making of an agreement.”

I joined several other academics (Randy E. Barnett, Omri Ben-Shahar, Henry N. Butler, Richard A. Epstein, Michael I. Krauss, Gregory E. Maggs, Geoffrey A. Manne, Robert H. Mnookin, Michael P. Moreland, Nathan B. Oman, Stephen B. Presser and co-TOTMs Geoff Manne and Josh Wright) in an amicus brief that not only argued for the winning side, but supplied specific reasoning supporting Justice Thomas’s concurrence. See the brief at 31-32, n. 7, arguing that “the reference in the savings clause to ‘revocation’ applies only to defects in the formation of contracts (procedural defects affecting offer and acceptance) rather than substantive ‘public policy'”.

The AT&T dissent reasoned that the California rule was not preempted because it merely applied the general contract principle of unconscionability, applied to all class action waivers whether or not in arbitration, and comported with the FAA’s purpose of “ensur[ing] judicial enforcement” of arbitration agreements.”

Thus, the issue joined between the majority and dissent was whether a rule that was not arbitration-specific, and therefore arguably fit within FAA §2’s “revocation of any contract,” nevertheless was preempted because it did not permit “enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings” and “interferes with fundamental attributes of arbitration.”

Although I agree with the Court’s result, the conclusion is not facially obvious.  The case also leaves several questions, including what other state limits on arbitration will be preempted even if they apply to all contracts (suggesting an advantage of Justice Thomas’s relatively clear rule upholding only state rules dealing with formation of arbitration agreements), and the extent to which the principles in this case apply to other preemption issues.

These questions cry out for an articulation of federalism concerns that underlie preemption generally and should apply to preemption by the FAA.  The majority opinion fails to do this at all.  The dissent at least addresses this point:

By using the words “save upon such grounds as exist at law or in equity for the revocation of any contract,” * * * Congress reiterated a basic federal idea that has long informed the nature of this Nation’s laws. * * * Here, recognition of that federalist ideal, embodied in specific language in this particular statute, should lead us to uphold California’s law, not to strike it down. We do not honor federalist principles in their breach.

I disagree, for reasons that Erin O’Hara O’Connor and I are developing in a work in progress currently titled “Preemption and Regulatory Coordination.”  Our basic idea (subject to work that is ongoing as I write) is expressed in a summary of a talk we gave last fall.

Our analysis begins, as it must, with Congressional intent.  But the intended scope of preemption is often murky.  The courts therefore need some principle to help fill the Congressional intent gap. 

We would look to the principle of regulatory coordination.  This principle requires recognition that regulation by many states entails both costs and benefits.  The benefits include the opportunity for experimentation, greater individual autonomy, and different rules to suit different needs.  On the cost side, empowering each state to regulate national or international firms can significantly impede growth and innovation.  Contrary to the AT&T dissent’s unqualified celebration of state sovereignty, preemption must take account of the need for coordination. 

More specifically, here’s a quick take on how we would approach coordination from the above summary of our talk:

Even if Congress has neither expressed nor implied a particular preemptive preference, courts are entitled to assume that Congress intended the statute to advance the purpose of the Constitutional provision that provides its authority. For example, when Congress chooses to enact a statute pursuant to the Commerce Clause, it makes a collective judgment that the need for federal economic coordination outweighs the need for state sovereignty, and courts should broadly effectuate this intent where coordination is appropriate. Accordingly, to the extent a statute is ambiguous and coordination is unnecessary, the court should presume against preemption. * * *

We then apply this principle to arbitration:

The Federal Arbitration Act makes unenforceable state laws aimed at restricting arbitration clauses. The coordination principle developed here leads [the authors] to conclude that ambiguity concerning the FAA’s application to class action waivers should be resolved in favor of state coordination, which, in the case of the FAA, favors broad enforcement of parties’ contractual dispute resolution devices.

There is ample evidence that the FAA was in fact intended to promote regulatory coordination in order to enhance the US’s position in international competition. See The Law Market, Chapter 5, and a shorter summary in our recent paper, Exit and the American Illness.

Notably, the rule the Supreme Court applied in AT&T comports with our “broad enforcement” approach.  Our analysis squares this rule with general policies underlying preemption. We hope that our approach will help clarify the general implications of this important case for preemption.

Arbitration and preemption

Larry Ribstein —  16 November 2010

Ok, so here’s the deal.  AT&T sells two cellular phones for nothing with a two-year contract term, and then charges $30.22 in sales tax.  Customers complain about the sales tax. The contract provides for individual arbitration where the customer resides. AT & T will pay double attorneys fees and $7,500 if the arbitrator awards the customer more than AT & T’s last written settlement offer before the arbitrator was selected and all arbitration costs and fees for non-frivolous claims.  Customers pay no attorneys’ fees to AT & T if they lose, retain full court remedies, and can choose in-person, telephonic, or no hearing at all for claims less than $10,000.

There’s just one problem:  customers do not get a right to class arbitration. 

Does this sound to you like an unconscionable contract?  A California federal court said so in Laster v. AT & T Mobility LLC, 584 F.3d 849 (9th Cir. 2009), applying California law set forth in Discover Bank v. Sup.Ct., 36 Cal.4th 148, 30 Cal.Rptr.3d 76, 113 P.3d 1100 (2005).  The court was not deterred from this result by the fact that the above rules made it cost-effective to arbitrate, or that customers could use AT&T’s informal claims process.  

According to the court, the problem is “that a person normally will not find it worth the time or the hassle to try to recover such a small amount, even if that person spends no money to hire an attorney or to invoke the arbitration process.”  The possibility of a consumer making that perfectly rational decision makes the contract unconscionable because without class actions, no one will enforce the law.

Perhaps this is a reasonable conclusion.  Why should AT&T be able to get away with a contract that lets it rip off people a little at a time? 

The answer is that a federal law lets it do so.  That law is the Federal Arbitration Act, which requires all U.S. courts to enforce arbitration provisions except on “grounds as exist at law or in equity for the revocation of any contract.” In other words, states may not develop a separate body of law to restrict the enforcement of arbitration clauses.  They can invalidate an arbitration clause only under generally applicable contract doctrine, such as fraud, duress, and unconscionability.  

Laster and other California cases say they are applying a general rule of unconscionability that invalidates a class action waiver in an arbitration clause if the agreement is a “contract of adhesion,” disputes are likely to involve small amounts of money, and “the party with superior bargaining power has carried out a scheme deliberately to cheat large numbers of consumers out of individually small sums of money.”  But this general rule forcing class actions in arbitration looks suspiciously arbitration-specific.

Aiding the determination of whether this is a general or arbitration-specific rule is the significant policy that is at stake. Congress enacted the Federal Arbitration Act in order to ensure that national firms could effectively contract for arbitration without fear of being hauled into a non-enforcing state court.  There is ample evidence that Congress took this step to preserve the U.S.’s international competitiveness.  While the California rule does not forbid arbitration, it undermines its efficiency by forcing firms in arbitration to contend with class actions.  Many firms might therefore choose to forego arbitration altogether and thwart Congress’s national market policy.

Some might think that this is a judgment the states ought to make.  But the Constitution, including the Commerce Clause, says that Congress can enact laws preserving a national market. The Supremacy Clause makes these laws effective by trumping inconsistent state laws.  California accordingly shouldn’t be able to defeat Congress’s national market strategy embodied in the FAA.  It follows that the FAA preempts the California law.

Of course this is only my opinion.  The Supreme Court granted cert in Laster to consider whether the FAA “preempts States from conditioning the enforcement of an arbitration agreement on the availability of particular procedures – here, class-wide arbitration – when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.”  It’s unclear from oral argument how the case will come out.  But it’s worth noting that Justice Alito said that the contract is “unconscionable because it doesn’t allow the enlistment of basically private attorneys general to enforce the law. And isn’t that quite different from ordinary unconscionability analysis?”

I’ll be discussing Laster as I present a paper at a Searle Civil Justice Institute this Thursday.  The paper analyzes preemption as a mechanism for preserving national markets.

While I’m focused on health care and antitrust, the question above is the subject of a conference at the Harvard Law School Petrie‐Flom Center which looks like it has a great lineup.  The conference is November 12th.  Here is the conference description (HT: Larry Solum).

Petrie-Flom Center for Health Law Policy, Biotechnology and Bioethics at Harvard Law School will be hosting a one-day meeting on Friday, November 12, 2010 on the subject of whether Congress should repeal the McCarran-Ferguson Act. There are a limited number of spaces available for specialists in the field who would like to attend. Requests for attendance will be accepted on the basis of availability. If you would like to attend or have any questions, please email Please note that unfortunately, funding for travel to Cambridge is not available and must be provided by attendee’s home institution.

Conference Description
In 1944, the U.S. Supreme Court, in United States v. South-Eastern Underwriters Association, held that the Commerce Clause authorized the federal government to regulate insurance companies. The next year, in direct response, Congress passed the McCarran-Ferguson Act, effectively shielding the business of insurance from federal antitrust regulation, except the regulation of boycott, coercion and intimidation, so long as state law regulates anticompetitive conduct. Shortly thereafter, a debate arose as to whether the federal antitrust law exemption should be repealed. With the recent flurry of federal reform of health care insurance markets, the current debate has centered on whether Congress should repeal the McCarran-Ferguson Act’s antitrust exemption for health care insurers. The one-day conference will bring together regulators, industry actors and academics working in the fields of business, law and economics to discuss the pros and cons of repealing the McCarran-Ferguson Act’s federal antitrust exemption for health care insurers. For information on presenters and paper topics see here>>

Here is the agenda.


Tomorrow, I’ll be presenting my work with James Cooper (FTC), State Regulation of Alcohol Distribution: The Effects of Post & Hold Laws on Output and Social Harms, at the DOJ Antitrust Division in the Economic Analysis Group Seminar.  We’ve received great critical feedback and suggestions for the paper thus far in earlier presentations and suspect that the DOJ economists will be no exception.  I’m looking forward to it.

In an earlier post on the CARE Act, I highlighted the fact that the law would essentially immunize state laws regulating the distribution and sale of beer, wine and liquor wholesalers from challenge under the Commerce clause and the Sherman Act.  For more details on the CARE Act, see the earlier post, but the bottom line is that the CARE Act will put an end to successful challenges to anticompetitive state regulation protecting alcohol wholesalers such as the Costco v. Maleng or Granholm v. Heald.  In this post, I want to focus on a recent empirical research project that I undertook with FTC lawyer and economist James Cooper evaluating both the competitive effects and social harms from these state regulations of alcohol distribution.   For those who want to skip the background and get straight to the paper, here is the SSRN link to “State Regulation of Alcohol Distribution: The Effects of Post and Hold Laws on Output and Social Harms.”  The paper has also been released as part of the FTC Bureau of Economics working paper series.

But first, I want to set the table a little bit with a bit of background that motivated our research and then turn to discussing our results and their implications for the current CARE Act debate.

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The Comprehensive Alcohol Regulatory Effectiveness Act — yes, the “CARE Act” — or HR 5034, is a piece of legislation aimed at supporting “State-based alcohol regulation.”  Recall the Supreme Court’s decision in Granholm v. Heald, which held that states could either allow in-state and out-of-state retailers to directly ship wine to consumers or could prohibit it for both, but couldn’t ban direct shipment only for out-of-state sellers while allowing in for in-state sellers.  Most states thus far have opened up direct shipping laws to the benefit of consumers.    While we occasionally criticize the Federal Trade Commission from time to time here at TOTM, its own research demonstrating that state regulation banning direct shipment and e-commerce harmed consumers is an excellent example of the potential for competition research and development impacting regulatory debates.  Indeed, Justice Kennedy’s majority opinion in Granholm cites the FTC study (not to mention co-blogger Mike Sykuta’s work here) a number of times.  But in addition to direct shipment laws, there are a whole host of state laws regulating the sale and distribution of alcohol.  Some of them have obviously pernicious competitive consequences for consumers as well as producers.  The beneficiaries are the wholesalers who have successfully lobbied for the protection of the state.  Fundamentally, the CARE Act aims to place these laws beyond the reach of any challenge under the Commerce Clause as per Granholm, the Sherman Act, or any other federal legislation.  Whether the CARE Act has any ancillary social benefits is an important empirical question — but you can bet that the first-order effect of the law, if it were to go into effect, would be to increase beer, wine and liquor prices.  More on the CARE Act and state regulation of alcoholic beverages below the fold.

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Last fall Guhan Subramanian, Steve Herscovici and Brian Barbetta (“SHB”) posted a paper claiming that Delaware’s antitakeover statute (Delaware GCL Section 203) was preempted by the Williams Act because it did not leave hostile bidders the “meaningful opportunity for success” required by three 1988 federal district courts which had upheld the Delaware law back in 1988. Specifically, SHB concluded:

Using a new sample of all hostile takeover bids against Delaware targets that were announced between 1988 and 2008 that were subject to Section 203 (n=60), we find that no hostile bidder in the past nineteen years has been able to avoid the restrictions imposed by Section 203 by going from less than 15% to more than 85% in its tender offer. At the very least, this finding indicates that the empirical proposition that the federal courts relied upon to uphold Section 203’s constitutionality is no longer valid. While it remains possible that courts would nevertheless uphold Section 203’s constitutionality on different grounds, the evidence would seem to suggest that the constitutionality of Section 203 is up for grabs. This Article offers specific changes to the Delaware statute that would preempt the constitutional challenge. If instead Section 203 were to fall on constitutional grounds, as Delaware’s prior antitakeover statute did in 1986, it would also have implications for similar antitakeover statutes in thirty-two other U.S. states, which along with Delaware collectively cover 92% of all U.S. corporations.

SHB has now been published in The Business Lawyer with several responses, including mine, Preemption as Micromanagement. Here’s the abstract of my paper:

Guhan Subramanian, Steven Herscovici & Brian Barbetta, Is Delaware’s Antitakeover Statute Unconstitutional? Evidence from 1988–2008 , 65 BUS. LAW. 685 (2010) (“SHB”), argues that the constitutionality of the Delaware takeover statute is “up for grabs” because it denies bidders the “meaningful opportunity for success” three Delaware district court opinions require to avoid preemption by the Williams Act. However, this comment on SHB argues that, even assuming the applicable federal cases might be construed to support SHB’s conclusion, courts almost certainly would not follow this approach once they saw, with the aid of SHB’s analysis, the extent to which it requires courts to micromanage state corporate law. Moreover, from a policy standpoint, this micromanagement could have a significant negative effect on the development of state law. In short, rather than providing an argument for preempting the Delaware statute, SHB’s analysis demonstrates why it is important to avoid this result.

SHB respond to the comments, including mine (most footnotes omitted):

Professor Ribstein argues that “[i]t would be inconsistent with [the Delaware trilogy’s] reliance on the legislature’s judgment to invalidate the statute based on circumstances arising after the legislature had applied its judgment.” We know of no principle in constitutional law, nor does Ribstein offer one, suggesting that when the legislature makes a constitutional assessment, and a court later acknowledges that assessment, the constitutional question becomes untouchable. Ribstein states that courts “did not necessarily contemplate that plaintiffs could return to court more than a generation after the [Delaware trilogy],” but this is precisely what the Delaware trilogy envisioned.22 It should be remembered that Delaware passed its first antitakeover statute in 1976 and took it off the books in 1987 because it was likely unconstitutional. It is not obvious why Ribstein’s hypothesized statute of limitations on constitutional claims should run longer than eleven years but shorter than twenty-two.

 22 See SHB, supra note 1, at ___ (citing relevant cases). Professor Ribstein also states that “SHB suggest that the poison pill itself avoids preemption.” Ribstein, supra note 16, at ___. We do not suggest this in our Article; therefore the “attempted distinction” between Section 203 and the pill that Ribstein criticizes, id. at ___, is not a distinction that we try to make. Ribstein then criticizes our Section 203 analysis because (he argues) if it were correct it would call into question defenses of unquestioned constitutional validity, such as the staggered board. See id. at ___. In fact, there is a natural distinction between transactional defenses, such as Section 203 and the pill, and other corporate governance provisions, such as the staggered board. See, e.g., CTS Corp. v Dynamics Corp. of Am., 481 U.S. 69, 99 (1987) (White, J., dissenting) (describing the “fundamental distinction” between transactional defenses such as the Indiana antitakeover statute and other corporate governance provisions, such as cumulative voting and staggered boards).

I do not, in fact, argue for “a statute of limitations.” Rather, my point is that any approach to the Supremacy Clause that would imply a continuing and detailed federal judicial power to review the entire body of state corporate law from a single federal statute would amount to a quite significant federal intrusion into a traditionally state-dominated area. Indeed, SHB call attention to this effect by their attempts to distinguish the poison pill, staggered board provisions and Delaware Section 203.

The SHB analysis is particularly uncalled for given a far less intrusive alternative which the Supreme Court suggested more than 25 years ago – that is, a presumption against preemption of state regulation of internal corporate governance. This was the point I made in discussing SHB’s article when it first appeared last year:

I’m skeptical of the authors’ unconstitutionality claim. Notably, Section 203 is part of the Delaware’s corporate statute, and therefore an integral part of its regulation of internal corporate governance, like its jurisprudence on the poison pill. This is important because, as Erin O’Hara and I explain in The Law Market (p. 126, footnote omitted): “Although the U.S. Constitution probably does not forbid a state from regulating the internal governance of a firm that is incorporated elsewhere, it may confer some extra regulatory power on the incorporating state. In CTS Corp. v. Dynamics Corp. of America, the Court reasoned that “no principle of corporation law and practice is more firmly established than a State’s authority to regulate domestic corporations, including the authority to define the voting rights of shareholders.”  This “authority” in CTS allowed the incorporating state to regulate the governance of firms based in other states, consistent with the Commerce Clause, and to preserve a state corporate law provision notwithstanding a potentially preemptive federal law, under the Supremacy Clause.  

The dangers of superbroad implied preemption of state corporate law are particularly salient in light of the imminent adoption of federal financial reform, as I discussed a few weeks ago:

Although none of the [corporate governance provisions in the Dodd bill] is individually earth-shaking, they cumulatively touch many major aspects of corporate governance formerly left to contract and state law.  This bill thus clearly adds to the framework for federal takeover of internal governance that SOX established. The overall effect is that it will be increasingly difficult to demark an area left exclusively for state law. This leaves little “firebreak” to protect against judicial incursions in the spaces not yet covered by explicit federal provisions.  This could ultimately profoundly affect the relationship between federal and state law regarding business associations. 

A generation ago the Supreme Court could say that “no principle of corporation law and practice is more firmly established than a State’s authority to regulate domestic corporations, including the authority to define the voting rights of shareholders.” CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 89 (1987). 

Erin O’Hara and I have argued that this separation between federal and state spheres does and should affect the scope of implied preemption of state law by federal statutes.  Thus, when the Court held that state securities actions were preempted by the Securities Litigation Uniform Standards Act, it emphasized “[t]he magnitude of the federal interest in protecting the integrity and efficient operation of the market for nationally traded securities.” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71, 78 (2006). See also my article on Dabit.

However, we noted that “[m]any federal ‘securities’ laws reach deep into the kind of internal governance issues covered by the [internal affairs doctrine].” Thus, corporate internal affairs are only “relatively safe from federal preemption” and internal affairs is not “a constitutional boundary, as shown by the continuing forward march of federal corporation law.”

Under the Dodd bill, the forward march picks up the pace.  

The combination of increasing federal regulation of corporate governance, the cumulative preemption effects inherent in this regulation, and the extremely broad view of preemption that SHB endorse would effectively annihilate state corporate law. We can only hope that Congress eventually comes to its senses. We shouldn’t add to the political mess by inviting the courts to join in the destruction.

Posner cites Wright

Geoffrey Manne —  5 February 2010

I’m sure it’s an honor just to be nominated.

A recent opinion from Judge Posner cites our very own Josh Wright (Joshua D. Wright & Todd J. Zywicki, “Three Problematic Truths About the Consumer Financial Protection Agency Act of 2009,” Lombard Street, Sept. 14, 2009, available here) (by the way, the essay has drawn a few comments, my favorite of which is definitely the one titled, “are you stupid or scumbags[?]”).

The opinion is vaguely interesting touching as it does on the propriety of short-term, high-interest loans, but the holding rests on an analysis of the commerce clause so is pretty well beyond my ken.

At issue is an Indiana statute that purports to apply Indiana’s restrictive usury laws to consumer contracts executed outside the state, but with creditors that have advertised or solicited sales within Indiana.  The Indiana usury statute at issue constrains consumer loan interest to terms under which “the ceiling is the lower of 21 percent of the entire unpaid balance, or 36 percent on the first $300 of unpaid principal, 21 percent on the next $700, and 15 percent on the remainder,” with an exception for payday loans.  Such terms would preclude payday loans if they weren’t excepted under the statute and does preclude car title loans of the sort at issue in the case.  The court rules that the restriction on out-of-state transactions is impermissible under the constitution and strikes down the Indiana law.

The interesting part (to me) of the case, and the part where Josh (and Todd) are cited, is where Posner discusses the law and economics and related scholarship of car title and payday loans.  He doesn’t really come down on one side or another in this debate except to aver that Indiana has a colorable interest in protecting its citizens from “predatory lending,” if it so chooses.  It seems to me that he gives too much credit to the behavioral-economics-based arguments on the “predatory lending is, well, predatory” side of the debate, but he really doesn’t wade into the debate.  Nevertheless, Josh and Todd get their mention (Todd actually gets a couple of mentions) in this section, and kudos to them (and to FinReg21, where their essay appears) for drawing Posner’s attention.

Todd Zywicki and Maxwell Stearns have a draft of their new textbook, “Public Choice Concepts and Applications in the Law,” available for review for profs that are interested in teaching with the manuscript this Fall 2008 or Spring 2009 term (the book is due to be published in 2009).  The book is designed for law profs along with “teachers of economics, political science, and public policy courses as well … and to be taught as either a follow-on to a traditional law and economics course or as a substitute for a traditional law and economics course.”  Zywicki & Stearns description of the project and invitation for those interested in early adoption to view the current manuscript is below the fold.

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GMU Law and the Mercatus Center are jointly presenting a symposium on “Anticompetitive Barriers to E-Commerce,” Wednesday, May 24th from 8 am to 5pm. The symposium announcement is here. The agenda is here. Kenneth Starr is the keynote speaker and will be presenting his thoughts on “The Commerce Clause and E-Commerce.” Other speakers tentatively listed on the agenda include: Asheesh Agrawal, James Cooper, John Delacourt, Jerry Ellig, Rick Geddes, Michael Greve, Debra Holt, Dan Sutter, James Tanford, and Alan Wiseman. Here is an excerpt from the announcement:

Business-to-consumer e-commerce is one of the fastest growing business sectors in the American economy. As a result, industry-specific economic regulations, occupational licensing, franchising laws, and a variety of other practices are now under challenge from a new direction. High-profile lawsuits and policy battles involving e-commerce have occurred in industries as diverse as automobiles, wine, caskets, real estate, and contact lenses. In some cases, the bricks-and-mortar incumbents have responded by lobbying for laws or regulations that would protect them from Internet-based competition. Innovation in e-commerce is also calling into question many established policies that generally protect incumbents from new entrants – often in-state interests from out-of-state interests.

In light of these developments, court cases and Federal Trade Commission hearings have revealed that there is a paucity of economic and legal analysis focused on legal and regulatory barriers to e-commerce. To explore these new issues, and to stimulate research in this area, the Mercatus Center at George Mason University, in collaboration with the George Mason University School of Law, is holding a daylong symposium to allow prominent legal and economic scholars to present papers on topics such as: the current status of legal and regulatory barriers, their impact on consumers, their implications for competitive federalism, and more…