Wednesday, December 17, 2008

Trade Regulation Tidbits

This posting was written by Jeffrey May, Darius Sturmer, and John W. Arden.

News, updates, and observations:

 Antitrust Institute President Bert Foer met on December 15 with members of the Obama transition team to discuss antitrust policy and specifically the AAI’s transition report to the next president (“The Next Antitrust Agenda: The American Antitrust Institute’s Transition Report on Competition Policy to the 44th President of the United States”). The 413-page report, available here on the AAI web site, contains detailed recommendations, background information, and analysis on issues such as cartels, monopoly, merger policy, private enforcement of antitrust laws, and antitrust policy in particular industries.

A memo on the meeting indicated that Foer made the following points: (1) the Antitrust Division in the Bush Administration did a “creditable job” in fighting cartels, but has been lax on merger enforcement, has ignored abuse in vertical relationships, and became “a cheerleader” for monopoly; (2) the Antitrust Division’s report on Section 2 of the Sherman Act should be withdrawn; (3) the next Department of Justice antitrust chief should be receptive to a “post-Chicago” view of economics and not heavily influenced by having spent a career defending the nation’s largest corporations against antitrust enforcement; (4) the Antitrust Division deserves significant increases in its budget; (5) the Division and Solicitor General has been consistently siding with antitrust defendants and should have “a more balanced perspective”; (6) the Division should have a more aggressive approach to merger enforcement; and (7) legislative priorities should include reforming the handling of resale price maintenance in light of the Leegin decision.

 Consumers of beer were not entitled to a preliminary injunction blocking InBev N.V./S.A.'s acquisition of the Anheuser-Busch Companies Inc., the federal district court in St. Louis has ruled. It was overwhelmingly likely that they could not succeed on the merits of their claim that the transaction violated Sec. 7 of the Clayton Act. On the same day that the court denied the preliminary injunctive relief, InBev announced that it had completed its acquisition of Anheuser-Busch. The consumers, however, have continued to pursue the litigation. They contended that, if the acquisition were consummated, they were threatened with loss and damage in the forms of higher prices, fewer services, fewer competitive choices, deterioration of products and product diversity, suppression and destruction of smaller actual competitors, and other anticompetitive effects. The consumers admitted that InBev and Anheuser-Busch were not competing directly with each other in the U.S. beer market, but contended that Belgium-based InBev could have entered the market. The consumers, however, failed to show that any current beer producer or distributor viewed InBev as a potential entrant into the U.S. beer market. Thus, the characterization of InBev as a perceived potential or actual potential competitor in the U.S. beer market was purely speculative, and the evidence presented was insufficient to warrant granting a preliminary injunction. The decision is Ginsberg v. InBev SA/NV, 2008-2 Trade Cases ¶76,400.

 A group of congressmen from Texas introduced legislation (H.R. 7330) on December 10 to stop the marketing of college football’s “Bowl Championship Series National Championship Game” as a championship or national championship game. In addition, the proposed “College Football Playoff Act of 2008” would make it unlawful to market merchandise related to any post-season NCAA Division I Football Bowl Subdivision (FBS) football game that refers to the game as a championship or national championship game. The measure would prohibit such conduct, unless the game is the final game of a single-elimination post-season playoff system for which all NCAA Division I FBS conferences and unaffiliated Division I teams are eligible. A violation would constitute an unfair or deceptive act or practice under the FTC Act. U.S. Rep. Joe Barton (R-Texas), a sponsor, said “the BCS championship game is not a championship game under any sensible interpretation of the manner in which sports championships are determined.” This season’s BCS Championship game pits No. 1 Oklahoma (12-1) against No. 2 Florida (12-1) on January 8, 2009. The University of Texas (11-1) is ranked third, despite having beaten Oklahoma during the regular season.

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