Antitrust Economics Law 237 Antonin Scalia Law School, George Mason University Fall 2018, Wednesdays 6 7:50 PM

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1 Antitrust Economics Law 237 Antonin Scalia Law School, George Mason University Fall 2018, Wednesdays 6 7:50 PM Professor John M. Yun, Hazel Hall-Room 450F jyun9@gmu.edu (703) Welcome to Antitrust Economics: The goal of the course is to teach the underlying economic foundations that drive antitrust analyses at the U.S. Federal Trade Commission and Department of Justice, Antitrust Division. We will assess key legal cases and seek an understanding as to how economics influences agency and court decisions. Broadly, each class will introduce core economic concepts and will illustrate those concepts with specific cases. Students are expected to come to class prepared and ready to discuss the assigned readings. Office Hours: Thursdays 2-4 PM & by appointment. I am also available via . Text: John Kwoka and Larry White (eds.), The Antitrust Revolution (6 th edition). (There is a 7 th edition, but the 6 th edition is the one to get.) Supplemental readings will be made available on TWEN. Course Requirements and Grading: Written Assignments: There will be two homework assignments. Each assignment is worth 10 percent of your overall grade for a total of 20 percent. All assignments must be submitted in PDF via TWEN before midnight on the due date. Late submissions will receive zero credit. Class Participation: Your grade is subject to a discretionary class participation adjustment of 1/3 rd of a grade in either direction. Final Exam: The final exam will be administered on Wednesday, December 6 PM (there is no make-up exam) and will count for 80 percent of your grade. The final exam is open book & notes. It will consist of short answer questions and multiple-choice. Tentative Syllabus: We may deviate from the tentative syllabus for reasons including current events, new cases, scheduling, et cetera. Please make sure you are signed up to receive updates via TWEN. Intellectual Property: I own all course content that is created (e.g., slides), regardless of format (electronic, print, audio, video). You are forbidden to use them with, or distribute them to, anyone other than your classmates in this course. 1

2 Class Schedule 1 Microeconomic Foundations (August 22) Optional: Steven A. Greenlaw and Timothy Taylor, Principles of Microeconomics, OpenStax. 2 Basic Models of Competition (August 29) Kwoka & White: Introduction (pp. 1-6). Benjamin Klein (1993), Market Power in Antitrust: Economic Analysis After Kodak, Supreme Court Economic Review 3, pp [Read only ] Timothy J. Brennan (2000), The Economics of Competition Policy: Recent Developments and Cautionary Notes in Antitrust and Regulation, RFF Discussion Paper Randal C. Picker (1994), An Introduction to Game Theory and the Law, Coase-Sandor Institute for Law & Economics Working Paper No. 22. Optional: Steven A. Greenlaw and Timothy Taylor, Principles of Microeconomics, OpenStax, Chs Horizontal Mergers Overview (September 5) Kwoka & White: pp. 8-29; Case 3: Sirius/XM Satellite Radio Merger (2008) U.S. Department of Justice & Federal Trade Commission, Horizontal Merger Guidelines (2010) Kenneth Heyer (2014), Consumer Welfare and the Legacy of Robert Bork, Journal of Law and Economics 57, pp Carl Shapiro (2010), The 2010 Horizontal Merger Guidelines: From Hedgehog to Fox in 40 Years, Antitrust Law Journal 77, pp Michael Vita and F. David Osinski (2016), John Kwoka s Mergers, Merger Control, and Remedies: A Critical Review, available at SSRN. 2

3 4 Horizontal Mergers Market Definition (September 12) Gregory J. Werden (2013), Why (Ever) Define Markets? An Answer to Professor Kaplow Antitrust Law Journal 78, pp Daniel P. O Brien & Abraham L. Wickelgren (2003), A Critical Analysis of Critical Loss Analysis, Antitrust Law Journal 71, pp FTC v. Ardagh Group, Saint-Gobain Containers: i) FTC s Complaint (2013), ii) Ardagh s Answer and Defenses (2013), and iii) Dissenting Statement of Commissioner Joshua D. Wright (2014). 5 Horizontal Mergers Unilateral Effects (September 19) Kwoka & White, Case 5: Oracle/PeopleSoft (2004). Gregory J. Werden & Luke M. Froeb (2011), Choosing Among Tools for Assessing Unilateral Merger Effects, European Competition Journal, pp Carl Shapiro (1996), Mergers with Differentiated Products, Antitrust, pp Charles River Associates (2010), Scoring Unilateral Effects with the GUPPI: The Approach of the New Horizontal Merger Guidelines, CRA Competition Memo. Ken Heyer (2012), Optimal Remedies for Anticompetitive Mergers, Antitrust, pp FTC Commissioner Joshua D. Wright (2015), Statement on Dollar Tree Family Dollar. 6 Horizontal Mergers Retail (September 26) Kwoka & White: Case 6: Staples/Office Depot (1997). Thomas A. Lambert (2008), Four Lessons from the Whole Foods Case, Regulation, pp FTC Statement on Office Depot OfficeMax (2013). FTC v. Staples-Office Depot Complaint (2016). 3

4 7 Coordinated Effects (October 3) Kwoka & White: pp Jith Jayaratne & Janusz Ordover (2013), Coordinated Effects: Evolution of Practice and Theory, working paper. Dennis W. Carlton & Sam Peltzman (2010), Introduction to Stigler s Theory of Oligopoly, Competition Policy International 6, pp Michelle M. Burtis & Bruce H. Kobayashi (2017), Regarding the Optimality of Cartel Fines, Cartel & Criminal Practice Committee Newsletter, ABA Antitrust Section, Spring, Issue 2. George Stigler (1964), Theory of Oligopoly, Journal of Political Economy 72, pp Joseph Harrington (2013), Evaluating Mergers for Coordinated Effects and the Role of Parallel Accommodating Conduct, Antitrust Law Journal 78, pp Vertical Conduct (October 10) Kwoka & White: pp , Case 12: Google-ITA. James C. Cooper, Luke M. Froeb, Dan O Brien, and Michael G. Vita (2005), Vertical Antitrust Policy as a Problem of Inference, International Journal of Industrial Organization 23, pp Jonathan B. Baker (2011), Comcast/NBCU: The FCC Provides a Roadmap for Vertical Merger Analysis, Antitrust 25, pp Ronald Coase (1937), The Nature of the Firm, Economica 4, pp Judge Richard J. Leon s AT&T-Time Warner Decision, June 12, Exclusionary Conduct (October 17) Kwoka & White: pp , Case 16: U.S. v. Dentsply (2005). J. Mark Ramseyer and Eric B. Rasmusen (2014), Exclusive Dealing: Before, Bork, and Beyond, Journal of Law and Economics 57, pp. S145-S160. Dennis W. Carlton and Ken Heyer (2008), Extraction vs. Extension: The Basis for Formulating Antitrust Policy Towards Single-Firm Conduct, Competition Policy International 4, pp

5 10 Tying & Bundling (October 24) Kwoka & White: Case 20: U.S. v. Microsoft (2001). International Competition Network (ICN) (2015), Chapter 6: Tying and Bundling, Unilateral Conduct Workbook. Michael Whinston (2001), Exclusivity and Tying in U.S. v. Microsoft, Journal of Economic Perspectives 15, pp Economic Expert Reports (October 31) Ken Heyer (2007), Predicting the Competitive Effects of Mergers by Listening to Customers, Antitrust Law Journal 74, pp Direct Testimony of Orley C. Ashenfelter, United States v. Apple Inc. (2013). Michael R. Baye and Joshua D. Wright (2011), Is Antitrust Too Complicated for Generalist Judges? The Impact of Economic Complexity and Judicial Training on Appeals, Journal of Law and Economics 54, pp Opening Presentation, Department of Justice, United States v. Apple Inc. (2013). Richard J. Gilbert (2015), E-books: A Tale of Digital Disruption, Journal of Economic Perspectives 29, pp Multi-Sided Platforms: Google, Android, & American Express (November 7) S.J. Liebowitz & Stephen E. Margolis (1994), Network Externality: An Uncommon Tragedy, Journal of Economic Perspectives 8, pp John M. Yun (2018), Understanding Google s Search Platform and the Implications for Antitrust Analyses, Journal of Competition Law & Economics, forthcoming. Joshua D. Wright & John M. Yun (2018), Burdens and Balancing in Multisided Markets: Ohio et al. v. American Express Adopts a First Principles Approach, Review of Industrial Organization, forthcoming. David S. Evans (2003), The Antitrust Economics of Multi-Sided Platform Markets, Yale Journal of Regulation 20, pp Statement of the FTC Regarding Google's Search Practices. 5

6 13 Antitrust & Intellectual Property (November 14) 2017 DOJ/FTC Antitrust Guidelines for the Licensing of Intellectual Property. Joshua D. Wright & Douglas H. Ginsburg (2013), Whither Symmetry? Antitrust Analysis of Intellectual Property Rights at the FTC and DOJ, Competition Policy International 9, pp FTC v. Qualcomm: (i) FTC complaint and (ii) Qualcomm s motion to dismiss. Dennis W. Carlton and Robert H. Gertner (2003), Intellectual Property, Antitrust, and Strategic Behavior, Innovation Policy and the Economy, vol. 3, pp Course Review (November 28) 15 Final Exam (December 6 PM) 6