Thursday, May 15, 2008

Trade Regulation Tidbits

This posting was written by John W. Arden.

News, updates, and observations:

 In May 14 testimony before the U.S. House Committee on Transportation and Infrastructure, the president of the American Antitrust Institute (AAI) warned that a proposed merger between Delta and Northwest Airlines could spur additional consolidation in the U.S. airline industry. AAI President Albert A. Foer urged the Department of Justice to “not only apply the standard antitrust analysis that requires the divestiture of overlapping city pairs in concentrated markets” but to also “pay attention to systems competition.” Foer recommended that the DOJ examine whether the number of national networks existing after consolidation would provide American consumers with a satisfactory range of choice, price, and service. Efficiency claims put forth by Delta and Northwest should be analyzed with great skepticism and weighed against (1) inefficiencies due to other “diseconomies of scale and scope,” (2) the cost of consummating the merger, and (3) the reduction in competition arising from the merger. Text of the written testimony appears here on the AAI website.

 The International Franchise Association has set its lobbying sights on repealing or amending the Rhode Island Fair Dealership Act of 2007 (CCH Business Franchise Guide ¶4390). The IFA “has retained local counsel and is supporting an effort to significantly mitigate the most onerous provisions of the 2007 law,” including the provision giving franchisees an opportunity to “cure” any claimed deficiency and the “litigiously vague” good cause for termination or nonrenewal provision. Two pending bills (H. 8150 and S. 2592) would delete the definition of “good cause”; repeal the requirement of giving dealers 90 days’ notice of termination, nonrenewal, or substantial change in competitive circumstances; excise the 60-day “cure” provision; and prohibit grantors from coercing a dealer to purchase a quantity of goods so large that it may not be resold within a reasonable period of time in the ordinary course of business. The amending legislation has the support of leaders in both the Rhode Island House and Senate, according to the IFA.

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